Overnight funds are mutual fund schemes that invest in overnight securities, typically having a maturity of one business day. Usually, they are used to park funds for a lesser duration it can range from one day to one week.The investment of these types of funds will be in debt securities and money market instruments, since they invest in debt securities, they are considered safe.
Liquid funds are mutual fund schemes that invest in debt and money market instruments that mature in 3 months. The investment of these types of funds will be in commercial paper, corporate bonds, and government securities. Even liquid funds are preferred as a short-term investment.