Overnight funds are safest among debt funds. Overnight funds are ideal for those with an investment horizon of one week or less, as investors can redeem after holding the units for even one day. This flexibility is a big advantage of overnight funds over liquid funds, which now charge an exit load for redemptions within seven days.
The entire point of investing in a liquid fund is to maintain a high degree of liquidity. The benefit of these funds is primarily felt by those investors who have surplus funds to park in an income generating investment. If you have a good amount of cash which is not invested anywhere and are looking for a short-duration investment option with lower risks, then liquid funds are ideal
Short-Term and Ultra Short-Term Debt Funds:
These fund schemes are popular among new investors who want a short-term investment with minimal risk exposure. These schemes have a maximum maturity of 3 years and usually a minimum maturity of 1 year.
These schemes invest primarily in government-issued securities which carry a very low level of risk and are generally rated quite high
Fixed Maturity Plans:
Fixed maturity plans can be closely likened to fixed deposits. These schemes have a mandatory lock-in period that varies depending on the scheme chosen. The investment must be done once, during the initial offer period, after which further investments cannot be made in this scheme.