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May 30 (Reuters) - (The following statement was released by the rating agency)
Fitch Ratings has assigned Yapi Kredi Invest's Fixed Income Long Term Bonds and Bills Fund, a fund managed by Yapi Kredi Portfoy, a 'Satisfactory' Fund Quality Rating.
The rating reflects the fund's disciplined approach to its selection of fixed income instruments, monitoring of asset allocation and duration management. The 'Satisfactory' rating also takes into account challenges from quickly evolving market segments that demand increasing research capacity.
The investment approach is directed by the manager's formal investment committee and related sub-committees i.e. for private sector bond selection which convenes on a weekly basis.
The investment process is based on an assessment of traditional top-down driven fundamental and macroeconomic factors largely through at-the-desk research. This is supplemented by consideration of quantitative models (technical/sentiment) maintained by a separate team. Defined allocation bands for fixed income exposure, asset type and duration are key drivers in the portfolio construction process. Within this framework the lead PM enjoys controlled freedom to operate within the given guidelines. The fund operates a distinct stop loss discipline under supervision of the independent risk department beyond its formal tracking error and value at risk limits.
The fund has slightly underperformed the Lipper category "Global Bond TRY" on a three year basis, but outperformed on a five year basis. The Lipper Leader Consistent Return score for the fund is five (highest quintile) over 10 years, four over five years and three over three years at end April 2013.
The fund invests in Turkish Treasury bonds, private sector debt (70% -100%) and money market instruments (0%-30%). It targets comparably longer investments according to Turkish market standards (but practically less than two years duration). Key drivers of performance are active asset allocation (both short and long-term) and duration management.
The current lead portfolio manager has 10 years of company tenor and been managing the fund since beginning of 2011. The co-manager is the head of Yapi Kredi Portfoy's fixed income department with more than 17 years of investment experience and also 10 years of company tenor. She had managed this fund previously since inception.
The overall investment process has been broadly stable since inception, but the fund changed its benchmark on 2 January 2013 partly on regulatory grounds, but also reflecting the evolution of Turkish capital markets, primarily the establishment of a private sector bond market. Amongst others overnight exposure in the benchmark has been lowered and duration increased. The Yapi Kredi Invest's Fixed Income Long Term Bonds and Bills Fund is a Turkish domiciled fund, launched 6 August 2001 with TRY102.9m of assets, as of end-April 2013.
Yapi Kredi Portfoy (Asset Manager Rating 'Highest Standards(tur)') is one of Turkey's market leaders in the asset management industry with TRY10.2bn assets under management (AuM) as of end-March 2013. The company has a long track record of managing domestic fixed income funds. The fixed income team currently manages a total of around TRY4.8bn with a majority in money market and short term bonds and bills funds.
Fitch's Fund Quality Ratings combine Fitch's experience in qualitative fund analysis with rankings and performance data from Lipper, a Thomson Reuters company. Fitch's Fund Quality Ratings offer an independent, forward-looking assessment of a fund's key performance and risk attributes and consistency of longer-term returns, relative to peer group or benchmarks. The ratings focus on the fund manager's investment process, key fund performance drivers, risk management, and the quality of the fund's operational infrastructure.
Fund quality ratings may be sensitive to material changes in the investment or operational processes or market risk profiles of the fund. A material adverse deviation from Fitch's guidelines for any key rating driver could cause Fitch to downgrade the ratings. For example, notable structural deterioration in the fund's performance or departure of key investment professionals may cause a lower rating. For additional information about Fitch's fund quality ratings guidelines, please review the criteria referenced below.
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