Overnight Funds are a sort of open-ended debt fund that invests in debt instruments with a one-day maturity. This means that the portfolio's assets mature every day, and the fund manager invests the proceeds in new securities for the portfolio's next maturity date. Overnight mutual funds are open-ended debt funds that invest primarily in overnight assets and securities, according to the Securities and Exchange Board of India (SEBI). In layman's terms, overnight funds are a type of debt fund. During trading hours, investors can enter and exit these funds.
Overnight funds are ideal for businesspeople or entrepreneurs that need to keep big sums of money on hand for short periods of time until they can be used elsewhere. Investing excess cash in an overnight fund and earning some returns, even if just for a few days, is preferable to leaving it idle in a current bank account. Investors seeking an alternative to bank deposits and/or FDs might consider investing in overnight funds, which offer higher yields. These below funds have a 5-STAR rating from Value Research online.
DSP Overnight Fund
The DSP Overnight Fund is a two-year-and-five-month-old fund with an average yearly return of 4.34 percent since its inception. It has a AUM of 919.52 crores, and the most recent NAV declared is 1111.064 as of July 3, 2021. Through investments largely in overnight securities with a one-business-day maturity, the program strives to provide returns commensurate with minimal risk while also providing a high level of liquidity.
DSP Overnight Fund Direct - Growth scheme returned 3.11 percent in the last year and 11.09 percent since its inception. The Expense Ratio of the direct plan of DSP Overnight Fund is 0.1%. .The fund has 5-STAR rating from Value Research online.
Mirae Asset Overnight Funds
These funds have a low chance of losing money, but they do not guarantee returns or capital protection. The Mirae Asset Overnight Fund is a one-year-and-eight-month-old fund with an average yearly return of 3.62 percent since its start. The NAV of Mirae Asset Overnight Fund for Jul 02, 2021 is 1,062.96. The Expense Ratio of Mirae Asset Overnight Fund's direct plan is 0.1 percent. Mirae Asset Overnight Fund has an AUM of 311 crores. The fund has 5-STAR rating from Value Research online.
PGIM India Overnight
PGIM India Overnight Fund Direct-Growth is a PGIM India Mutual Fund Debt mutual fund scheme. This scheme was launched on August 27, 2019, and is currently managed by Kunal Jain and Kumaresh Ramakrishnan, the fund managers. It has a market capitalization of 155.11 crores, and the most recent NAV declared is 1070.755 as of July 3, 2021, at 4:20 pm.
PGIM India Overnight Fund Direct-Growth fund returned 3.16 percent in the last year and 7.04 percent since its inception. The minimum SIP amount for this scheme is Rs 1,000. The Expense Ratio of the PGIM India Overnight Fund's direct plan is 0.1 percent.
Edelweiss Overnight Fund
Edelweiss Overnight Fund Direct - Growth is an Edelweiss Mutual Fund Debt mutual fund program. This scheme was created on July 23, 2019 and is currently managed by Rahul Dedhia and Gautam Kaul, the fund managers. It has a AUM of 408.72 crores, and the most recent NAV declared is 1076.259 as of July 3, 2021. Edelweiss Overnight Fund Direct - Growth program returned 3.14 percent in the last year and 7.60 percent since its inception. The minimum SIP amount for this scheme is Rs 500. The Expense Ratio of the direct plan of Edelweiss Overnight Fund is 0.1%. .
Taxation on Overnight Funds
Overnight funds are taxed in the same way that debt funds are. Short-term capital gains tax applies to overnight fund units held for less than three years. Investors will be taxed in accordance with their income bracket. Long-term capital gains (LTCG) tax is imposed at a rate of 20% on units of overnight funds held for more than three years. The benefit of indexation is delivered to investors. Dividends paid from overnight funds are taxed according to the investor's tax bracket.
The fund is a good investment option for people who want to put their surplus money to work and generate a larger reward with less risk.
This fund is an open-ended liquid fund with a low risk profile. Its unique feature makes it an excellent investment for people with a low risk appetite.
Changes in the RBI's interest rates, as well as changes in a borrower's credit ratings, have little to no impact on such funds.
How Do Overnight Funds Work?
Fund managers buy overnight bonds in the overnight market at the start of each business day. These mutual funds, in turn, sell overnight funds to investors. These bonds or securities will mature or be redeemed the following business day. Furthermore, as a reinvestment, the funds would acquire more overnight bonds from redemption inflows, and so on. It's important to note that the reinvestment is done at the new rate that applies the next day.
4 Overnight Mutual Funds To Invest In India 2021
|Fund Name||Rating||1-year Return|
|DSP Overnight||5 STAR||3.11|
|Mirae Asset||5 STAR||3.18|
|Edelweiss Overnight||5 STAR||3.14|
|PGIM India Overnight||5 STAR||3.16|
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