• by Stocktry Expert
• 09th Oct 2021

Overnight Fund is a kind of Debt Mutual Fund

Slide - 1

An overnight fund is a kind of debt mutual fund where mutual fund houses invest investors’ money in various money market instruments which have a maturity of only 1 day. It is an open-ended mutual fund scheme which means that an investor can invest and withdraw their funds anytime.

Slide - 2

Participants:

1. Lenders - They are the investors in the scheme.

2. Mutual Fund Houses - The company which acts as a bridge between lender and borrower in this transaction.

3. Borrower - They borrow the funds that investors invest, and return it with interest.

4. CCIL - The Clearing Corporation of India Ltd. is responsible for the settlement of transactions between the lender and the borrower, as both parties may not know each other.

Slide – 3

Reasons to invest:

1. Low risk investment

2. Liquidity

3. Less volatile