Fitch Ratings has today affirmed IDFC Liquid Fund's National rating at 'AAA(ind)'. The rating reflects the fund's highest standards for credit quality and its conservative investment approach, relative to other liquid funds in India. The agency has considered the fund's investment policies, management capabilities, risk management procedures and supporting controls in ensuring consistency with management's objectives.
As of 29 December 2008, 96% of the portfolio was invested in assets rated 'F1+ (ind)'/'AAA (ind)' or equivalent, while the minimum credit rating of securities held was 'F1' or equivalent. Fitch notes that the portfolio management team intends to maintain the fund's credit quality when choosing new investments. However, the poor liquidity of lower rated securities in the Indian debt market may put the portfolio credit quality under stress, should assets held in the portfolio be downgraded.
The fund faces concentration risk as at end-December 2008; a large portion of the fund's assets are invested with debt securities of just three issuers, of which the largest, in terms of portfolio exposure is a Government supported entity, hence partially mitigating this concentration risk.
The investment manager of the mutual fund is IDFC Asset Management Company Pvt. Ltd. The sponsor of the mutual fund is IDFC, a diversified financial institution providing a range of financing products and services with infrastructure as its focus area.
Fitch's National fund credit ratings are assigned on a scale of 'AAA(ind)' to 'C(ind)', on a rating scale similar to that of Fitch's National Long-term credit ratings, with 'AAA(ind)' indicating the highest credit quality standards within the country. The assigned rating provides a relative measure of the fund creditworthiness only in comparison with other funds in India as it is a National rating. It is therefore not internationally comparable. Fitch's bond fund credit rating do not consider the effect of market risk on net asset value ("NAV") movements, and are not an indication of the stability of the fund's NAV. Such issues are assessed in Fitch's bond fund volatility ratings.
As of 29 December 2008, 96% of the portfolio was invested in assets rated 'F1+ (ind)'/'AAA (ind)' or equivalent, while the minimum credit rating of securities held was 'F1' or equivalent. Fitch notes that the portfolio management team intends to maintain the fund's credit quality when choosing new investments. However, the poor liquidity of lower rated securities in the Indian debt market may put the portfolio credit quality under stress, should assets held in the portfolio be downgraded.
The fund faces concentration risk as at end-December 2008; a large portion of the fund's assets are invested with debt securities of just three issuers, of which the largest, in terms of portfolio exposure is a Government supported entity, hence partially mitigating this concentration risk.
The investment manager of the mutual fund is IDFC Asset Management Company Pvt. Ltd. The sponsor of the mutual fund is IDFC, a diversified financial institution providing a range of financing products and services with infrastructure as its focus area.
Fitch's National fund credit ratings are assigned on a scale of 'AAA(ind)' to 'C(ind)', on a rating scale similar to that of Fitch's National Long-term credit ratings, with 'AAA(ind)' indicating the highest credit quality standards within the country. The assigned rating provides a relative measure of the fund creditworthiness only in comparison with other funds in India as it is a National rating. It is therefore not internationally comparable. Fitch's bond fund credit rating do not consider the effect of market risk on net asset value ("NAV") movements, and are not an indication of the stability of the fund's NAV. Such issues are assessed in Fitch's bond fund volatility ratings.
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