When one thinks of investing to preserve their capital, we believe the categories of liquid and overnight funds are apt, given their minimum risk and high liquidity approach. While overnight funds invest in securities with a maturity of one day, liquid funds invest in bonds maturing within 91 days. These categories are widely used by corporates to park their advanced tax payments or any other surplus money and by retail investors either for very short-term investing needs or to park their emergency corpus. When allocating money required to be at your call at very short notice, a high degree of safety and liquidity is of utmost importance. And these are the kind of parameters that liquid and overnight funds can potentially fulfil. Given their mandates, funds among each of these categories are fairly homogeneous and so there isn't much that separates one fund from another within each category set, more so in case of overnight funds. Things can be a tad different in case of liquid funds, where although the short-term ratings of the underlying bonds may be similar, the long-term ratings of those bonds do highlight some variations among funds, thereby altering their risk-return equation. In our selectio
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