New Delhi, July 2 -- Investors who want to temporarily park surplus money without taking significant interest-rate risk can explore overnight mutual funds. These debt schemes invest exclusively in securities that mature on the next business day, making them one of the lowest-risk funds.

Unlike longer-duration debt funds, overnight funds are not significantly affected by fluctuations in bond prices driven by interest rate changes. Instead, they try to generate modest returns by continuously investing in one-day money market instruments.

Based on one-year CAGR performance, Bank of India Overnight Fund emerged as the best-performing scheme in the category, followed by Franklin India Overnight Fund and Bajaj Finserv Overnight Fund.

Bank of...