Prelims level : Economics Mains level : GS-III Technology, Environment, Economic Development
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Why in News:

  • Net outflows from credit risk funds jumped over threefold in the month of May as investors remained wary of the segment in the light of recent downgrades and defaults.


  • According to data from the Association of Mutual Funds in India (AMFI), credit risk funds saw net outflows of ₹4,156 crore in May, as against ₹1,253 crore in April.
  • Further, the net inflows into the overall debt funds segment fell significantly from ₹1.21 lakh crore in April to ₹70,119 crore in May.
  • Industry experts believe that while investors are likely to be sceptical of investing in credit funds, the income and gilt categories could see a jump in inflows on the back of favourable macro-economic factors and also with the central bank cutting rates while changing its stance from neutral to accommodative.
  • Macro-economic factors appear to be favourable with low inflation, high reserves and balance of payments under control.The flows into equity schemes are likely to revive going forward as uncertainty related to election results are over and the recent market movement also points towards increased investor confidence.
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