Overnight Funds: With interest rates firming up, overnight funds are back in demand

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overnight fund – Considered the safest category in debt mutual Fund There is renewed interest from investors looking to revamp their portfolio. The stock market is facing adverse conditions and Rate of interest Hoping to move forward, investors are parking Pennies In overnight funds, where the returns have increased from an average of 3% a few months ago to around 5%.

Fund managers are also recommending overnight funds to avoid mark-to-market losses as interest rates are rising, while equity investors are investing in this category to conserve capital, before reinvesting them back into equities. .

A Balasubramaniam, MD, Aditya Birla Sun Life Mutual Fund says, “Overnight the fund returns with the repo rate and there is no mark-to-market risk involved. Therefore, risk averse investors fall in this category.

Overnight funds back in demand as interest rates firm upagencies

Overnight funds are the safest among debt funds as they invest in securities with residual maturity of one day.

Since October 2021, when the equity market started to fall, savvy investors have started using overnight funds to park money. The number of folios in the category increased from 1.55 lakh in October 2021 to 5.85 lakh in May 22, with the average assets under management increasing from ₹ 1.16 lakh crore to ₹ 1.36 lakh crore. In the same period, loan MF AUM declined from ₹14.89 lakh crore to ₹13.62 lakh crore

Nirav Karkera, Head of Research, Fisdom, says, “The sharp volatility in the market, moderate risk in this category and quick redemption timelines have attracted direct equity investors who are looking to make a temporary deposit of funds.” Believing the markets are still quite valuable, they have booked profits in equities and are using overnight funds to park money and transfer it to equity funds when the market valuations are attractive.

Karkera expects further hike in interest rates by 100-120 basis points in the current fiscal. reserve Bank of India In the last two months, key policy rates have increased by 90 basis points. “If the expected growth is evenly spread over the upcoming scheduled monetary policy meeting, investors can earn annual returns in the range of 5% to 5.5%,” Karkera said.

Within the fixed income space, many investors prefer overnight funds as there can be a mark to market loss in case of long duration or gilt funds. In the last one year, investors have earned 1.67 per cent in corporate bond funds and 0.04 per cent in gilt funds.

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Calculating income tax often feels like solving a complicated puzzle, doesn’t it? You gather salary slips, deductions, exemptions, and slabs, yet confusion remains. However, things do not have to be this stressful anymore. An Automatic Income Tax Calculator in Excel for Govt & Non-Govt Employees (FY 2025-26) works like a smart assistant that does the heavy lifting for you. In fact, it calculates tax automatically, accurately, and instantly. Moreover, it saves time, reduces errors, and gives you peace of mind. So, whether you are a government employee, a private-sector professional, or even a pensioner, this article will guide you step by step. Additionally, it will help you understand why Auto Calculate Income Tax Preparation Software in Excel is becoming the preferred choice for the general public across India. 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Calculating income tax often feels like solving a complicated puzzle, doesn’t it? You gather salary slips, deductions, exemptions, and slabs, yet confusion remains. However, things

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February 11, 2026 No Comments
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