New Delhi, Sept. 27 -- Continued uncertainty in interest rates could put further pressure on flows into credit funds, as elevated rates volatility is making investors more cautious about riskier assets, BofA Securities said in a research report.

The report noted that the current rates volatility backdrop is unlikely to provide a tailwind for credit funds, with volatility at around 90 points on the SMOVEU3M index. BofA said higher rates volatility tends to weaken flows into credit funds as investors prefer relatively safer assets such as government debt.

The SMOVEU3M index is the ICE BofAML Swap MOVE 3-Month Index that measures interest rate volatility by tracking the market-implied volatility of 3-month over-the-counter (OTC) interest r...