Nedgroup Investments commentary on Fitch Rating: Nedgroup Investments Money Market Fund

20 July 2012 Nedgroup Investments

According to Ian Ferguson, head of Cash Solutions at Nedgroup Investments, recent research undertaken by Nedgroup Investments indicates an overwhelming preference amongst Corporate Treasurers for money market funds to be rated.

Eighty percent of corporate treasurers that responded to our survey stated that they preferred money market funds rated by an international rating agency. Investors gain an additional layer of comfort from such a rating, knowing that an independent, international rating agency has conducted a thorough review of the fund, the fund manager and the investment process,” he says.

Ferguson adds that retirement fund investors in money market funds are less constrained by their investment guidelines, but trustees generally also prefer rated money market funds. He explains that this need of corporate and retirement fund investors is the reason that Nedgroup Investments applied for a rating from Fitch Ratings for the Nedgroup Investments Money Market Fund.

Following a rigorous process a 'AA+(zaf)' National Fund Credit Rating and a 'V1(zaf)' National Fund Volatility Rating has been assigned to the fund. Ferguson confirms that the rating will not result in any change to the way the fund will be managed.

“We are delighted that Fitch Ratings has recognised the high credit quality of the issuers to the fund as well as the fund’s low exposure to interest-rate risk and spread risk in the rating - supported by the fund’s short maturity profile,” he says.

Furthermore, Ferguson adds, that the limited number of high quality issuers in South Africa results in South African money market funds being more concentrated than their global peers. He concludes that in the absence of this concentration risk Fitch Ratings stated that the Nedgroup Investments Money Market fund could achieve a 'AAA(zaf)' Fund Credit Rating.

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