Global Credit Ratings accords ratings to three Nedgroup Investments funds

Global Credit Ratings (GCR) yesterday accorded national scale fund ratings of AA+(ZA)(f) to both the Nedgroup Investments Money Market Fund and the Nedgroup Investments Corporate Money Market Fund, and a rating of AA(ZA)(f) to Nedgroup Investments Core Income Fund. All three ratings were accorded Stable outlooks.

All three funds have fixed income mandates which prioritise capital preservation, low risk and high liquidity, although they exhibit different investment mandates and preferences, and target different investor bases. Taquanta Asset Managers is mandated to manage the funds’ investment portfolios on behalf of Nedgroup Investments. According to GCR, based on track records, the funds have consistently met performance objectives, exceeding 12 month rolling return benchmarks within mandate constraints. Furthermore, the funds’ marketing, operations, risk management, compliance and administration processes follow market 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 value. The AA(ZA)(f) rating accorded to Nedgroup Investments Core Income Fund indicates its high credit quality (as reflected in its WACR), as well as its low interest rate/spread risk. GCR notes, however, that market risk is higher in the Core Income Fund than the money market funds, given its exposure to longer dated securities of a floating rate nature, and the fact that the fund has a variable net asset value.

GCR indicated that the funds’ ratings take cognisance of credit concentration, a systemic issue in South Africa affecting most or all variable rate, money-market type fixed income funds. 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 their ratings.