Best Overnight Mutual Funds in India 2026: Top 10 & Guide
What Overnight mutual funds are, who should invest, key risks, and the top 10 funds with returns and risk data.
Overnight mutual funds invest in debt securities that mature the next day, which keeps risk very low and liquidity high. Returns are correspondingly low. This guide covers who should invest, benefits, risks, and the top 10 overnight funds from our data.
Key takeaways
- Overnight funds are open-ended debt funds that hold securities maturing the next day.
- Their very short maturity helps shield them from interest rate and credit risk, but returns are low.
- They suit very short-term surplus cash and investors who want quick access to money.
- They typically have no entry or exit load.
- The top 10 funds below are ranked by an internal score, with return and risk numbers shown.
What are overnight mutual funds?
An overnight mutual fund is an open-ended debt fund that invests in debt securities maturing the very next day. When they mature, the manager reinvests the proceeds in other securities with a similar maturity. Individuals or businesses can use these funds to park extra cash for a short period in a highly liquid debt fund. The lower risk also means considerably lower returns.
Who should invest in overnight mutual funds?
- Investors looking for a very low-risk option.
- Investors with a short horizon who want quick access to funds.
- Investors who want to hold excess cash until it needs to be used.
- Investors comfortable with lower returns.
What should you consider before investing?
- Risk and returns: very low risk means low returns, so investors seeking more should consider other options.
- Horizon: they suit keeping money for a short period with easy access.
- Portfolio duration: overnight securities mature the next day, which boosts liquidity and lowers risk.
- Fund details: compare the expense ratio and performance with other overnight funds, because costs matter more over short periods.
Advantages of overnight mutual funds
- High liquidity and easy entry and exit.
- Very low risk, shielded from interest rate and credit risks.
- Useful for businesses and corporates that need to park surplus cash.
- Typically no entry or exit load.
Risks of overnight mutual funds
- Sudden interest rate moves on a given day can still affect the value of debt securities.
- Returns may be only slightly higher than a savings account, so they are not ideal for the long term.
- Inflation can outpace the fund's growth and cut real returns.
- The expense ratio and taxes can reduce already low returns.
How are overnight mutual funds taxed?
Gains on units sold are added to your income and taxed at the applicable rate, regardless of how long you held the units. Rules change, so check the current position or speak to a tax advisor.
Top 10 Overnight mutual funds ranked by an internal score
These are the top 10 Overnight funds from our data, ranked by Invo Wealth's internal fund-quality score. The score itself is not shown, only the return and risk numbers behind it. A "--" means the fund has not completed that period or the data is unavailable.
Returns across 6 months to 5 years
Performance data as of 5 September 2026.
| Fund | 6M CAGR | 1Y CAGR | 3Y CAGR | 5Y CAGR |
|---|---|---|---|---|
| ICICI Prudential Overnight Fund | 5.19% | 5.21% | 6.02% | 67.39% |
| quant Overnight Fund | 4.95% | 4.98% | 6.07% | -- |
| BANK OF INDIA OVERNIGHT FUND | 5.68% | 5.53% | 6.21% | 5.80% |
| Bajaj Finserv Overnight Fund | 5.23% | 5.28% | 6.06% | -- |
| UTI - Overnight Fund | 5.20% | 5.23% | 6.04% | 5.65% |
| Axis Overnight Fund | 5.25% | 5.27% | 6.08% | 5.68% |
| Invesco India Overnight Fund | 5.24% | 5.24% | 6.04% | 5.64% |
| PGIM India Overnight Fund | 5.08% | 5.14% | 6.00% | 5.62% |
| HSBC Overnight Fund | 5.22% | 5.23% | 6.01% | 5.61% |
| Mirae Asset Overnight Fund | 5.19% | 5.22% | 6.02% | 5.63% |
Risk and consistency metrics
| Fund | ISIN | Volatility | Max drawdown (3Y) | Sortino ratio |
|---|---|---|---|---|
| ICICI Prudential Overnight Fund | INF109KC17E3 | 0.13% | 0.00% | -15.01 |
| quant Overnight Fund | INF966L01BC4 | 0.22% | 0.00% | -13.11 |
| BANK OF INDIA OVERNIGHT FUND | INF761K01EZ6 | 0.26% | 0.00% | -13.24 |
| Bajaj Finserv Overnight Fund | INF0QA701250 | 0.16% | 0.00% | -14.92 |
| UTI - Overnight Fund | INF789F01604 | 0.12% | 0.00% | -14.48 |
| Axis Overnight Fund | INF846K01O23 | 0.14% | 0.00% | -14.48 |
| Invesco India Overnight Fund | INF205KA1114 | 0.15% | 0.00% | -14.29 |
| PGIM India Overnight Fund | INF663L01T43 | 0.10% | 0.00% | -14.02 |
| HSBC Overnight Fund | INF336L01OL4 | 0.14% | 0.00% | -15.00 |
| Mirae Asset Overnight Fund | INF769K01FE1 | 0.13% | 0.00% | -14.55 |
Differences between overnight funds are small, so expense ratio and consistency matter more than a single period's return.
How to invest in Overnight mutual funds
You can invest in these funds using the Invo Wealth app. Sign up, get complete portfolio insights and start investing in mutual funds that actually suit you.
Conclusion
Overnight funds are a simple, low-risk parking spot for short-term cash. Expect modest returns and compare costs.
Frequently asked questions
What is an overnight mutual fund?
It is an open-ended debt fund that invests in securities maturing the very next day. When they mature, the manager reinvests the proceeds in similar securities.
Who should invest in overnight funds?
Investors who want a very low-risk, highly liquid option for surplus cash over a short horizon and are fine with lower returns.
Do overnight funds charge entry or exit loads?
They typically have no entry or exit load, which gives investors flexibility and cost-effectiveness.
How are overnight fund gains taxed?
Gains on units sold are added to your income and taxed at the applicable rate, regardless of the holding period.
How can I invest in overnight mutual funds?
You can invest through a SIP or a lump sum. To invest in these funds, you can use the Invo Wealth app: sign up, get portfolio insights and start investing.
Mutual fund investments are subject to market risks; read all scheme-related documents carefully. This article is for education only and is not investment advice. Past performance does not guarantee future returns. Invo Wealth is an AMFI-registered mutual fund distributor (ARN-368528).