Axis Overnight Fund has emerged as the leader in its category with a 6.2% three-year CAGR return. The fund outperformed peers like UTI and Nippon India, which recorded 6.1% returns. This analysis covers funds with over Rs 1,500 crore in assets, offering insight for investors seeking low-risk, short-term cash parking options.
The Axis Overnight Fund has recorded the highest three-year compound annual growth rate (CAGR) in its category, delivering a return of 6.2% as of early July 2026. This performance places it slightly ahead of UTI Overnight Fund and Nippon India Overnight Fund, which both reported 6.1% returns over the same three-year period. These figures are based on comparative data for funds maintaining assets under management (AUM) of at least Rs 1,500 crore.
Overnight funds are designed to invest in debt securities that mature in a single business day. Because they target such short-term debt instruments, these funds are primarily used by investors to manage surplus liquidity while aiming to minimize market risk. The high liquidity of these assets allows investors to move their capital in and out of the fund with minimal friction compared to longer-duration debt or equity funds.
When comparing the scale of these funds, the ICICI Prudential Overnight Fund stands out with a significantly larger corpus. It manages assets totaling approximately Rs 10,066.3 crore, making it one of the largest offerings in the segment. While Axis Overnight Fund leads in the three-year return metric, the difference in AUM size suggests that investors may prioritize different factors, such as fund size and stability, alongside historical returns.
Beyond the three-year performance, the Axis fund has maintained stability across shorter timeframes. It recorded a one-year CAGR return of 5.3%, aligning with its benchmark performance. Additionally, it held the top position for one-month returns at 0.4% and three-month returns at 1.3%.
Investors looking at overnight funds should note that these returns are heavily influenced by the prevailing interest rate environment set by the Reserve Bank of India (RBI). As the underlying assets are overnight securities, any shift in RBI policy rates typically impacts the yields of these funds almost immediately. While these funds are among the lowest-risk instruments in the mutual fund space, they do not offer guaranteed returns and are subject to the risks associated with the credit quality of the underlying short-term debt instruments. The primary monitorable for investors remains the ongoing yield trend, which is a direct reflection of current money market conditions.