Global Credit Ratings accords ratings to three Investec funds

Global Credit Ratings (GCR) has accorded national scale fund ratings of AA+(ZA)(f) to both the Investec Money Market Fund and the Investec Corporate Money Market Fund. Both fund ratings in respect of the money market funds were accorded Stable outlooks.

The money market funds have cash strategy mandates which invest in low-risk fixed income portfolios and prioritise capital preservation and high liquidity. The funds, which are managed by Investec Asset Management, exhibit varied conservative investment mandates and preferences which are targeted to suit their different investor bases. GCR notes that, based on track records, the money market funds have consistently outperformed their 12 month rolling performance benchmarks, while fulfilling their investment objectives and remaining within mandates and investment guidelines. The funds’ marketing, operations, risk management, compliance and administration processes follow international best practice.

The according of the AA+(ZA)(f) rating to the two money market funds was driven by their high credit quality, as reflected by their weighted average credit ratings (WACRs), and very low volatility and market risk given their short maturity/duration profiles and targeted constant net asset values.

GCR has also accorded a rating of AA(ZA)(f) with a Stable outlook to the Investec STeFI Plus Fund, managed by Investec Asset Management. The AA(ZA)(f) rating accorded to the STeFI Plus Fund indicates its high credit quality (as reflected in its WACR), as well as moderately low market risk. GCR notes that interest rate risk and volatility are higher in the STeFI Plus Fund than the money market funds, given its more flexible mandate, exposure to securities with longer tenors, and variable net asset value.

GCR indicated that the funds’ ratings take cognisance of credit concentration, which is a systemic issue in South Africa, affecting most or all variable rate money market funds, as well as other fixed income funds which are essentially cash strategies (i.e. with high liquidity, low volatility, capital preservation mandates). Stability or improvement in concentration risks could help to enhance the ratings for all three funds. Conversely, any breaches, and/or deterioration in credit, liquidity or concentration risks, could negatively affect the funds’ ratings.