Overnight Fund

An Overnight Fund is a debt mutual fund that invests exclusively in securities with a one-day maturity primarily overnight reverse repo agreements (tri-party repos) and Collateralised Borrowing and Lending Obligations (CBLOs). Because the portfolio matures and is reinvested every single day, overnight funds carry virtually zero interest rate risk and negligible credit risk. They offer returns slightly above a savings bank account and are primarily used by corporates, HNIs, and treasury managers to park surplus funds for very short periods—sometimes just a single day. In India, overnight funds became a popular alternative to liquid funds after SEBI tightened credit quality norms for liquid fund portfolios in 2019.