Top Overnight Funds in India
Just like how you can’t predict when you’ll stumble upon some extra cash, overnight funds are a type of mutual fund where you can park your money for a short period, usually overnight (hence the name), to earn a little extra while you figure out what to do with it. In a nutshell, overnight funds are like the parking lot of the investment world. You can drive in, stay for a short while, and then zoom off to your next destination when the time is right. Let’s understand overnight mutual funds better.
List of Best Overnight Funds in India
To find the best Overnight Mutual Fund, investors should consider factors such as returns and expense ratios. Since these funds invest in securities that mature overnight, their performance should be measured weekly or monthly. However, let’s look at the top overnight funds based on their 5-yr CAGR today:
| Name of the Fund | Market Cap (Rs. in cr.) | Expense Ratio (%) | CAGR 5Y (%) |
|---|---|---|---|
| Mirae Asset Overnight Fund | 1,743.29 | 0.08 | 4.99 |
| PGIM India Overnight Fund | 58.93 | 0.1 | 4.97 |
| DSP Overnight Fund | 2,333.79 | 0.06 | 4.97 |
| HSBC Overnight Fund | 2,275.81 | 0.06 | 4.97 |
| Axis Overnight Fund | 8,404.40 | 0.05 | 4.96 |
| Nippon India Overnight Fund | 6,921.68 | 0.08 | 4.95 |
| Baroda BNP Paribas Overnight Fund | 653.48 | 0.09 | 4.95 |
| Mahindra Manulife Overnight Fund | 300.68 | 0.09 | 4.94 |
| LIC MF Overnight Fund | 821.40 | 0.07 | 4.94 |
| Tata Overnight Fund | 4,126.58 | 0.06 | 4.94 |
Disclaimer: Please note that the above table is for educational purposes only, and is not recommendatory. Please do your own research or consult your financial advisor before investing. The data is derived from Tickertape Stock Screener and is subject to real-time updates.
Note: The data on the list of the best overnight mutual funds is from 30th December 2024. This data is derived from the Tickertape Mutual Funds Screener.
- Plan: Growth
- Category: Debt > Overnight Fund
- 5Y CAGR: Sorted from Highest to Lowest
🚀 Pro Tip: You can use Tickertape’s Mutual Fund Screener to research and evaluate funds with over 50+ pre-loaded filters and parameters.
Brief Overview of the Top 10 Overnight Mutual Funds
Mirae Asset Overnight Fund
Mirae Asset Overnight Fund is an open-ended debt mutual fund offered by Mirae Asset Investment Managers (India). The fund was launched on 3rd January 2020 and is managed by Mahendra Jajoo. As of 30th December 2024, the fund had assets under management (AUM) worth Rs. 1,743.29 cr., and its expense ratio is 0.08%. Furthermore, the fund had a 3-yr CAGR of 6.06% and a 5-yr CAGR of 4.99%.
PGIM India Overnight Fund
PGIM India Overnight Fund is an open-ended debt mutual fund offered by PGIM India Asset Management, the Indian arm of PGIM, the global investment management business of Prudential Financial, Inc. This fund was launched on 11th February 2020 and is managed by Kunal Jain. As of 30th December 2024, the fund had an AUM worth Rs. 58.93 cr., and its expense ratio is 0.1%. Furthermore, the fund had a 3-yr CAGR of 6.02% and a 5-yr CAGR of 4.97%.
DSP Overnight Fund
DSP Overnight Fund is an open-ended debt mutual fund offered by DSP Asset Managers. The fund was launched on 4th March 2019 and is managed by fund managers Vikram Chopra and Mohit Singla. As of 30th December 2024, the fund had an AUM worth Rs. 2,333.79 cr., and its expense ratio is 0.06%. Furthermore, the fund had a 3-yr CAGR of 6.05% and a 5-yr CAGR of 4.97%.
HSBC Overnight Fund
HSBC Overnight Fund is an open-ended debt mutual fund managed by HSBC Asset Management (India) Private Limited. The fund was launched on 4th March 2002, and the fund manager for this scheme is Ritesh Jain. As of 30th December 2024, the fund had an AUM worth Rs. 2,275.81 cr., and its expense ratio is 0.06%. Furthermore, the fund had a 3-yr CAGR of 6.04% and a 5-yr CAGR of 4.97%.
Axis Overnight Fund
Axis Overnight Fund is an open-ended debt scheme offered by Axis Asset Management Company. The fund was launched on 9th January 2019 and is managed by Devang Shah and Hardik Shah. As of 30th December 2024, the fund had an AUM worth Rs. 8,404.40 cr., and its expense ratio is 0.05%. Furthermore, the fund had a 3-yr CAGR of 6.06% and a 5-yr CAGR of 4.96%.
Nippon India Overnight Fund
Nippon India Overnight Fund is an open-ended debt scheme managed by Nippon Life India Asset Management Limited. The fund was launched on 18th February 2019 and is managed by Vivek Sharma. As of 30th December 2024, the fund had an AUM worth Rs. 6,921.68 cr., and its expense ratio is 0.08%. Furthermore, the fund had a 3-yr CAGR of 6.05% and a 5-yr CAGR of 4.95%.
Baroda BNP Paribas Overnight Fund
Baroda BNP Paribas Overnight Fund is an open-ended debt mutual fund managed by Baroda BNP Paribas Asset Management India Pvt. Ltd. The fund was launched on 14th August 2019 and is managed by seasoned professionals Mayank Prakash and Karthikraj Lakshmanan. As of 30th December 2024, the fund had an AUM worth Rs. 653.48 cr., and its expense ratio is 0.09%. Furthermore, the fund had a 3-yr CAGR of 6.03% and a 5-yr CAGR of 4.95%.
Mahindra Manulife Overnight Fund
Mahindra Manulife Overnight Fund is an open-ended debt mutual fund scheme from Mahindra Manulife Mutual Fund, a collaboration between Mahindra Finance and Manulife Investment Management. The fund was launched on 4th December 2019 and is managed by Rahul Pal and Ritesh Jain. As of 30th December 2024, the fund had an AUM worth Rs. 300.68 cr., and its expense ratio is 0.09%. Furthermore, the fund had a 3-yr CAGR of 6.04% and a 5-yr CAGR of 4.94%.
LIC MF Overnight Fund
LIC MF Overnight Fund is an open-ended debt mutual fund offered by LIC Mutual Fund. The fund was launched on 17th September 2019, and is managed by Anoop Singh. As of 30th December 2024, the fund had an AUM worth Rs. 821.40 cr., and its expense ratio is 0.07%. Furthermore, the fund had a 3-yr CAGR of 6.03% and a 5-yr CAGR of 4.94%.
Tata Overnight Fund
Tata Overnight Fund is an open-ended debt mutual fund scheme offered by Tata Asset Management. The fund was launched on 18th November 2018 and is managed by Amit Somani. As of 30th December 2024, the fund had an AUM worth Rs. 4,126.58 cr., and its expense ratio is 0.06%. Furthermore, the fund had a 3-yr CAGR of 6.04% and a 5-yr CAGR of 4.94%.
What are Overnight Funds?
Overnight fund meaning is a type of open-ended debt fund that invests in assets or securities with a maturity of one day. These funds are considered the safest within the mutual fund category due to their low-risk profile, offering safety, liquidity, and withdrawal flexibility. They invest in overnight assets like reverse repo and debt instruments with one-day maturity, earning through interest payments rather than capital gains. The primary purpose of overnight funds is to provide investors with a safe avenue to park surplus funds for a brief period, making them ideal for those seeking safety and liquidity over high returns.
Purpose of an Overnight Mutual Fund
Overnight funds serve the purpose of optimising investors’ cash reserves for profitability. The following characteristics of these funds enhance their feasibility:
- Brief Investment Horizon: Overnight Mutual Funds reach maturity within a single day, enabling investors to maximise the utility of surplus cash quickly.
- Low Risk: With their short investment horizon and immediate maturity, these funds maintain minimal exposure to risk.
- High Liquidity: These funds are recognized as highly liquid investment instruments, facilitating prompt and efficient access to funds when needed.
Features of Overnight Funds
Here is a list of features of overnight funds.
- 1-Day Maturity: Overnight funds are debt instruments with a maturity of just one day. Investors often transfer their money from a regular account to overnight funds to earn interest.
- Risk-Free: Since overnight funds invest in debt instruments like debt securities and Reverse Repos, capital losses are minimal.
- Benefit from Interest Rate Fluctuations: Returns from overnight funds are directly proportional to interest rates. When rates fall, the value of these funds decreases, but they earn more when rates rise.
How Do Overnight Funds Work?
Overnight funds operate by investing in diverse debt securities, each maturing within a day, ensuring a continuous cycle of securities maturing and being reinvested daily. Fund managers replace maturing securities with new ones daily, maintaining a consistent turnover and incremental growth in Assets Under Management (AUM) through interest payments.
Factors To Consider Before Investing in the Best Overnight Fund
Overnight funds may represent the safest category within the realm of debt funds. However, before making any investment decisions, investors should be mindful of several key aspects regarding these funds.
- First, it’s important to understand that overnight funds may prioritise safety over maximising returns. Comparable to a savings account, these funds can offer a secure investment avenue with easy accessibility. Consequently, the returns associated with overnight funds typically remain on the lower end of the spectrum. Nevertheless, various funds’ returns and expense ratios diverge significantly. Consequently, investors are advised to conduct thorough market analyses to identify funds that demonstrate consistent performance coupled with low costs.
- Secondly, investors opting for overnight funds must acknowledge the trade-off between returns, safety, and liquidity. Consequently, any investment in such funds should align with your financial objectives and strategy rather than reacting solely to recent credit-related events. For instance, while allocating a portion of funds to overnight investments is prudent, completely transitioning to overnight funds solely for risk avoidance may not be optimal. For investors with a low risk tolerance but a longer investment horizon (e.g., 3-6 months), greater returns can be achieved by considering overnight liquid funds or ultra-short duration funds that primarily hold high-quality bonds.
Who Can Invest in an Overnight Mutual Fund?
- Investors Seeking Short-Term Investment Options: Overnight funds can present an optimal choice for individuals with a brief investment horizon. These funds cater to those aiming for an investment duration of one week or less, enabling investors to redeem their units after merely one day of holding. This aspect of flexibility is a significant advantage of overnight funds over liquid funds, which may now impose an exit load for redemptions within seven days.
- Transitioning from Conservative to Equity Investments: Those seeking a cautious approach before entering equity markets may find overnight funds beneficial. By initially parking their funds in overnight funds, investors can gradually utilise a systematic transfer plan (STP) to transition their investments into equity funds. This strategy allows for a phased entry into equity investments while safeguarding the invested corpus within the secure environment of overnight funds.
How to Invest in Overnight Funds?
You can easily invest in overnight mutual funds by following these steps:
- To invest in mutual funds, you can visit an equity investment platform such as smallcase or Tickertape.
- The next step would be to research and identify the best overnight funds to invest in which align with your investment thesis. You can easily select and learn more about the best overnight funds with the help of a financial tool like the Tickertape Mutual Fund Screener. With 50+ pre-loaded filters, it helps you to create a comprehensive list by giving insights about the fund’s performance. Try it now!
- Once you have selected the funds based on different metrics and parameters, go to smallcase.com or the smallcase app, and login via your phone number. Click on ‘Discover‘ and enter the name of the specific mutual fund name in the search bar and hit enter. You can click on ‘invest now’ and select whether you want to invest a lump sum amount or start a SIP and start investing!
However, if you’re confused about which stocks to pick, you can explore smallcases:
- smallcases are readymade portfolios of stocks/ETFs, that are based on a theme idea or strategy
- They’re created and managed by SEBI-registered experts
- smallcase.com offers over 500+ stock portfolios, created by 180+ managers
- Some of the popular smallcases among new investors are as follows:
Disclosures for aforementioned smallcases
Taxation on Overnight Funds as per Union Budget 2024-25
Overnight funds are taxed as debt funds, and understanding the latest tax regulations on debt mutual funds is crucial for effectively managing your overnight fund investments. The Union Budget 2024 has introduced significant changes to the taxation of debt mutual funds. Here is a detailed breakdown of the new tax rules:
Short-Term Capital Gains (STCG)
If you sell your debt fund units within three years (36 months), the gains from these investments are considered short-term capital gains. According to the new budget, these gains will be taxed according to your income tax slab rate.
Long-Term Capital Gains (LTCG)
For debt funds held for over three years (36 months), the gains are categorized as long-term capital gains. The key points to note under the new budget are:
- Tax Rate: The tax rate for long-term capital gains on debt funds is now a flat 12.5%, regardless of the amount of gain.
- No Indexation Benefit: The benefit of indexation, which previously allowed investors to adjust the purchase price of their assets for inflation, has been removed for debt funds. This means that the entire gain from selling a debt fund after three years will be taxable at the flat rate of 12.5%.
Summary
| Capital Gains Tax | Description |
| Short-Term Capital Gains (STCG) | If you sell your debt fund units within three years (36 months), the tax will be as per your income tax slab. |
| Long-Term Capital Gains (LTCG) | For debt funds held for over three years (36 months), the tax rate is now a flat 12.5% without indexation benefits. |
Benefits of Overnight Mutual Fund
Debt funds may offer numerous advantages, particularly to retail investors or those accustomed to maintaining their funds in bank deposits.
However, the safest option within debt funds is represented by overnight funds. Thus, overnight fund interest rates present zero interest rate risk and minimal credit risk. Let’s explore this further.
- Eliminate the Possibility of Losses: Due to their exclusive investment in overnight securities, overnight funds may eliminate the possibility of capital gains or losses. Consequently, the fund’s value remains stable, gradually increasing through interest income. Moreover, the near-absence of credit risk is notable, as securities maturing in a single day are highly unlikely to default on interest payments. To summarise, when compared to liquid funds, which closely resemble them in terms of risk-return dynamics, overnight mutual funds offer relatively higher safety.
- Cost Effective: Over night funds are characterised by their cost-effectiveness, primarily because their debt holdings do not require active management. In practice, most overnight funds maintain expense ratios below 1%.
- Flexible Holding Period: One may benefit from overnight funds with a flexible holding period, enabling them to retain their investments for as long as needed. Entry and exit from the investment are straightforward, allowing you to earn secure, market-linked returns throughout the investment duration.
- Efficient Use of Surplus Funds: These funds offer a lucrative investment avenue for individuals seeking to earn higher returns on their excess cash while minimising risk. Unlike many long-term bank deposits or fixed deposits, overnight mutual funds enable investors to earn profits over shorter durations, sometimes just a matter of days.
Disadvantages of Overnight Funds
While Overnight Funds provide stability and easy access to funds, they also come with drawbacks. Here are some disadvantages:
- Low Returns: Compared to other mutual funds, over night funds may offer modest returns.
- Tax Implications: Gains from Overnight Funds are taxed based on the individual’s income tax rate, potentially reducing returns.
- Inflation Risk: With relatively low returns, there’s a risk that the purchasing power of invested capital may not keep pace with inflation.
To Wrap It Up…
Overnight Funds provide investors with a safe and flexible investment option with the potential to earn higher returns than traditional savings accounts. By understanding the factors that affect these funds and how to find the best options, investors can make informed decisions about their investments. However, it’s important to do your own research and/or consult a financial advisor before investing in the best agriculture stocks in India.
Most Popular Mutual Funds:
As an investor to have a diversified mutual funds portfolio, you might also like to know more about these different types of funds for investing –
Frequently Asked Questions(FAQs) on Overnight Funds
The top 5 over night funds in India 2024 are as follows:
(a) DSP Overnight Fund Direct-Growth
(b) Nippon India Overnight Fund
(c) Aditya Birla Sun Life Overnight Fund
(d) UTI Overnight Fund Direct-Growth
(e) Kotak Overnight Fund
Note: This information is provided for educational purposes and is not intended as a recommendation or endorsement.
Over the past year, Overnight Funds have yielded an average annual return of 6.79%. Looking at their performance over the last three and five years, the overnight fund returns annually stand at 5.1% and 4.74%, respectively.
Apart from the listed top 10 overnight funds, investors need to choose a fund that matches their goals and timeline for investing because everyone’s needs are different.
The minimum investment amount to invest in the best overnight mutual funds is Rs. 1000.
