Overnight Fund

The core principle of Overnight Funds is simple: fund managers purchase securities that mature within 24 hours. As these instruments mature, the proceeds are reinvested into new one-day maturity securities. This daily reinvestment cycle ensures that the fund's portfolio is constantly refreshed, maintaining a low risk and high liquidity.

Overnight Funds are commonly used by individuals, businesses, and institutional investors who want to temporarily park surplus cash, sometimes even for just a single day. These funds offer slightly better returns than traditional savings accounts, without requiring the capital to be locked in.

Who Should Invest in Overnight Funds?

Overnight Funds are ideal for investors who:

• Need a secure place to park idle cash for a day or a few days
• Want to maintain liquidity while earning modest returns
• Are building an emergency fund
• Are awaiting the right time to invest in long-term instruments like equity mutual funds or fixed-income products
• Want to avoid market volatility while keeping capital safe

Whether you're a business managing daily cash flow or an individual with surplus funds, Overnight Funds provide a flexible and low-risk investment avenue.

Overnight Funds offer unmatched liquidity and safety due to their one-day maturity structure. Here are some key benefits:

• High Liquidity: Funds can be withdrawn easily, with most redemptions processed within one working day (T+1).
• Low Risk: Investment in high-quality, short-duration debt instruments minimizes interest rate and credit risk.
• No Lock-in Period: Investors are free to redeem their funds at any time without incurring penalties.
• Reasonable Returns: Although not high, returns are generally better than those of standard savings accounts.
• No Exit Load: Most Overnight Funds do not impose an exit load, even for very short holding periods.
• Professional Management: Fund managers ensure capital is parked in highly rated and secure instruments.

Taxation for Overnight Funds follows standard debt mutual fund rules:

• Short-Term Capital Gains (STCG): If held for less than 3 years, gains are added to your income and taxed according to your applicable income tax slab.
• Long-Term Capital Gains (LTCG): If held for more than 3 years, gains are taxed at 20% with the benefit of indexation, which can reduce the tax burden.