Fitch Affirms Fund Ratings of Two Investec Managed Funds, Revises One Volatility Rating
Fitch Ratings-New York/London/Paris-23 February 2010: Fitch Ratings has today affirmed the fund credit and the fund volatility national ratings of Investec Money Market Fund (IMMF) at AAA/V1 (zaf). The agency also affirmed the fund credit rating of Investec Corporate Money Market (ICMMF) fund at 'AAA(zaf)' and revised the fund volatility rating of 'V1+(zaf)' to 'V1(zaf).
The rating actions follow a review of Fitch's global bond fund rating criteria and the removal of 'V1+' from Fitch's rating scale. 'V1' is now the highest volatility rating that a fund can achieve. For further information, please see the criteria report 'Global Bond Fund Rating Criteria', dated 10 February 2010 which is available at www.fitchratings.com.
The fund credit and the fund volatility ratings reflect both funds' high standards for credit quality and the short term nature of portfolio investments, conservative fund interest rate duration policy and modest liquidity risk relative to other funds in South Africa. A fund credit rating of 'AAA' indicates the highest underlying credit quality and a 'V1' rating the lowest market risk.
It is important to note that comparisons between different national fund rating scales or between an individual national and international scale are inappropriate. Fitch also highlights that while funds rated 'AAA/V1' are expected to offer good liquidity and limited risk on net asset value, they have different risk profiles compared to funds rated on Fitch's money market fund scale (denoted with the 'mmf' subscript).
The two funds invest in fixed and floating rate money market instruments, including negotiable certificates of deposit, promissory notes (linked to Johannesburg Inter - Bank Rate and prime rate) issued by South African and foreign banks with location operations, and fixed deposits. In addition, the IMMF may hold up to 30% of total portfolio assets in asset backed commercial paper. As per prospectus all assets within the portfolio must mature in 12 months and have a minimum rating of 'F1 (zaf)' / 'A (zaf)' while the portfolio interest rate duration (WAMr) may never exceed 90 days for the IMMF and 60 days for ICMMF which in practice is managed to 45 days.
The WAMr of the IMMF was slightly reduced to an average of 56 days during 2009 from 60 days in 2008. The portfolios' weighted average final maturity (measuring the spread risk) is maintained at approx 150 days on average. The funds also have direct or indirect (in the case of ABCP holdings) exposure to the funds' parent company - Investec Bank (rated A+ (zaf)), approx 10% of portfolios assets as at end January 2010. Fitch expects such exposure to remain moderate and broadly in line with Investec Bank's short term issuance level and regularly monitors its evolution.
The manager of the fund is Investec Asset Management Ltd (IAM), wholly owned by Investec Group (A+ (zaf)). As at end-September 2009, IAM had R251.9bn of assets under management, of which around R33.2bn were in money market products. The fund is regulated by the South Africa's Financial Services Board (FSB) and Collective Investment Scheme Control Act (CISCA).
Applicable criteria, "Global Bond Fund Rating Criteria", dated 10 February 2010, are available on Fitch's website at www.fitchratings.com.
Contacts: Keranka Dimitrova, Paris, Tel: +33 1 44 29 92 80, Aymeric Poizot, CFA Tel: +33 1 44 29 92 76.
Media Relations: Francoise Alos, Paris, Tel: +33 1 44 29 91 22, Email: francoise.alos@fitchratings.com; Brian Bertsch, New York, Tel: +1 212-908-0549, Email: brian.bertsch@fitchratings.com; Hannah Warrington, London, Tel: +44 (0) 207 417 6298, Email: hannah.warrington@fitchratings.com.
Additional information is available at www.fitchratings.com.
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