Aside from parking money for short-term needs, investors turn to liquid and overnight funds for systematic transfer plans (STPs). How so? Put the surplus money in such schemes and then transfer the entire sum to equity funds within a few days, weeks or months. So why have assets from liquid funds gone down over the past year? Investors have been hit by falling interest rates. The RBI cut policy rates in 2020. Short-term interest rates fell sharply. This made low duration funds (these invest in bonds maturing in 6-12 months) and ultrashort duration (these invest in bonds maturing in 3-6 months) popular. Assets of liquid funds (these invest in bonds maturing in less than 91 days) went down.