Momentum Asset Management fund receives Fitch Ratings accolade

Global ratings agency, Fitch Ratings, has assigned the Momentum Money Market Fund an 'AA+(zaf)' National Fund Credit Rating (NFCR) and a 'V1(zaf)' National Fund Volatility Rating (NFVR). This rating is in line with the highest money market fund rating in South Africa and the fund is managed by Momentum Asset Management.

The fund held assets under management worth approximately R9.8 billion as at 3 October 2014. It invests in fixed and floating-rate money market instruments, including negotiable certificates of deposit, promissory notes, fixed deposits issued primarily by the major South African and foreign banks with local operations and corporate issuers.

According to Fitch, the 'AA+(zaf)' rating is driven by the fund’s high credit quality, as reflected by its strong weighted average rating factor. The 'V1(zaf)' rating is driven by the fund’s low exposure to interest rate risk and spread risk, as reflected in its short maturity profile.

Momentum Asset Management is a subsidiary of JSE-listed MMI Holdings (AA-(zaf)/Stable). As of end-June 2014, Momentum Asset Management’s total assets under management were approximately R182 billion, of which R84 billion was managed by the fixed-income capability in the business. The Momentum Money Market Fund is managed by Conrad Wood and Richard Klotnick, both of whom have extensive experience and tenure.

Commenting on the ratings, Wood said: “It is meaningful for us to be rated highly by Fitch as they are one of the most prominent and respected rating agencies in the world. For us to achieve these ratings, our fund has had to meet exacting evaluation of asset credit quality, concentration and sensitivity to market risk.”

Importantly, the weighted average credit quality of the fund is high, which also reflects the short maturities of the fund’s assets. Fitch’s review of historic portfolio holdings indicates that the fund has been stable over time, maintaining high credit quality.

The fund primarily invests in issuers rated in the 'F1+(zaf)'/'AA(zaf)' rating category; however, it can also hold securities in the 'BBB(zaf)' rating category.

In Fitch's opinion, the fund is moderately concentrated due to its large single issuer and largest five issuer exposure(s) exceeding the guidelines for ‘moderate concentration’ discussed in Fitch’s rating criteria. However, the fund is less concentrated than rated peers, primarily due to its relatively greater exposure to corporate issuers.

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