Mutual fund experts said the rate of return on overnight securities may be lower, but overnight funds will provide better capital protection
After the default of IL&FS hit liquid schemes in September 2018, mutual fund houses went on a spree of launching overnight funds that prove to be less risky
Liquid funds can be used to park your surplus for a short period, typically in excess of seven days. Overnight funds are meant for very short-term money.
From April 1, 2020, liquid funds shall invest a minimum of 20 per cent in ‘liquid assets,’ defined as Cash, Government Securities, T-bills and Repo on Government Securities.
In the last one year, overnight funds have delivered 5.5-6.5 percent average return, while liquid funds gave 6.92 percent.
IDFC Mutual Fund, Reliance Mutual Fund, DSP Mutual Fund, DSP Mutual Fund have sought the SEBI’s approval to launch Overnight Funds