Banking and PSU Bond (BPSU) Funds have seen net outflows (redemptions exceeding the investments) over the past four months. These schemes were not long ago preferred by investors due to low credit risk and healthy risk-adjusted returns. For CY2019 and CY2020, these schemes gave 10.16% and 10.26% returns, respectively. However, the falling interest rates in the economy has brought down the portfolio yields of these schemes, making them unattractive as inflation is expected to remain sticky. Also, the SEBI guidelines on valuations and fund exposure norms for AT1 bonds, which were held by many BPSU schemes, could be the reason behind the selling pressure as investors look to avoid these bonds.