Liquid funds returned 6.46% in a year; overnight 5.26%

The number

Over the twelve months to 30 September 2026, the median liquid fund returned 6.46%. The median overnight fund returned 5.26%.

Every figure here is computed from each fund's daily NAV, Direct plan, Growth option, as of the NAV of 30 September 2026. A fund counts toward the one-year figures only if it is at least a year old: 38 liquid funds and 36 overnight funds. One fund house lists a second, near-identical liquid scheme code; it is counted once.

Two tight bunches

The middle half of the liquid funds, from the 25th to the 75th percentile, spans just 0.11 percentage points over the year. For overnight funds it is 0.09 points.

Put another way: 30 of the 38 liquid funds finished within 0.10 points of the median, and 26 of the 36 overnight funds did the same.

That is what the rules are built to produce. A liquid fund may only hold paper maturing within 91 days, and an overnight fund holds one-day lending. With so little room to differ, two funds can only drift apart through costs, the credit quality of what they hold, and small timing choices.

Where the spread actually is

The bunching is at the top. The tail is longer at the bottom.

On ₹10 lakh held for the year, the best fund beat the median by about ₹980. The weakest trailed the median by about ₹7,100. Choosing among the top three-quarters barely mattered. Avoiding the bottom few mattered more.

Costs explain part of it, not all. Across the 38 liquid funds, the Direct-plan expense ratio AMFI published at the end of September 2026 has a correlation of −0.37 with the one-year return: funds that charge more tended to return less, but loosely. Today's expense ratio is also not necessarily the one a fund charged all year.

The overnight table has one oddity. Its top fund, Bank of India Overnight Fund, at 5.48%, owes most of its lead to a single NAV jump of 0.21% dated 17 May 2026. That is about three weeks' worth of overnight income on one day. It reads like a one-off rather than a better process.

The rate came down

The three-year figure says more about the year than the one-year figure does. The median liquid fund compounded at 6.93% a year over three years, but managed only 6.46% over the last one.

In a fund that rolls over three-month paper, a lower recent return is what falling short-term interest rates look like. The same is true of overnight funds: 6.05% a year over three years, 5.26% over the last one.

What this does not tell you

A liquid fund is not a savings account. Its NAV can fall, and has, when a fund held paper that later defaulted. The narrow spread here reflects a calm year for credit.

Past returns don't predict. Next year's figure depends on where short-term rates go, not on this table.

Exit loads apply. Liquid funds charge a small graded exit load on units redeemed within seven days of purchase. Overnight funds generally charge none.

Tax is at your slab. Gains in a debt fund bought after 1 April 2023 are added to your income and taxed at your slab rate, however long you hold.

Where to go from here

The liquid fund and overnight fund pages list every scheme with live returns. The guide on overnight vs liquid vs ultra-short funds explains where each one fits, and parking an emergency fund in liquid funds covers the use most people have for them.

For the category that competes with liquid funds on equity taxation, see arbitrage funds against liquid funds.