Fitch Assigns Ignis Absolute Return Government Bond Fund 'Strong' Fund Quality Rating

Tue Jan 7, 2014 12:20pm EST

Related Topics

(The following statement was released by the rating agency) Link to Fitch Ratings' Report: Ignis Absolute Return Government Bond Fund here LONDON, January 07 (Fitch) Fitch Ratings has assigned Ignis Absolute Return Government Bond Fund a 'Strong' Fund Quality Rating. The fund is managed by Ignis Investment Services Limited (NR). KEY RATING DRIVERS The 'Strong' Fund Quality Rating reflects the fund's differentiated investment approach that exploits seven different and uncorrelated risk buckets and is supported by advanced proprietary technology. FUND PROFILE The fund is a UCITS compliant Luxemburg SICAV and was launched in March 2011. It is an absolute return government bond fund with GBP2.1bn in assets under management (AUM) as of end-December 2013. INVESTMENT PROCESS The investment process aims to identify macro-economic themes, which it expresses in forward rate terms over a six-month investment horizon. The focus on forward rates, as opposed to duration based, market and portfolio analysis differentiates the fund. This approach allows the fund to deconstruct yield curves and pinpoint the precise exposures it desires on different curves, based on its macro-economic views and strength of short-term conviction. The fund actively trades seven uncorrelated risk buckets (such as rates, FX and volatility) using a variety of instruments (including derivatives). It trades on the basis of its macro-economic views and level of short-term conviction across the risk buckets. The fund favours relative value and directional strategies but generally avoids carry strategies. Ignis has developed a proprietary tool, ClearCurve, which is a research and portfolio management tool allowing the investment team to visualise its exposures in forward rate terms. It also has a "trade optimiser" functionality, which calculates the minimum number of trades needed to re-position the portfolio. This tool differentiates the process. It is based in economic theory and supported by the team's quantitative analysts. RESOURCES The rates team consists of ten staff, headed by Russ Oxley, who has 16 years' investment experience, and is also the fund's lead Portfolio Manager (PM). The team also includes four PMs, two economists, including Ignis's chief economist, Stuart Thompson who has 28 years' experience and a quantitative analytics team of three led by Adam Purzitsky, who holds a PhD in economics. There is an independent risk management team of seven. TRACK RECORD The fund does not yet have a three-year track record and therefore does not yet have a Lipper Leader Score for Consistent Return. Nonetheless, Fitch's review of the fund's performance and a related mandate indicate consistent outperformance, the diversification benefits of effectively uncorrelated performance engines, and adherence to the fund's philosophy, albeit over a limited period to date. FUND MANAGER Ignis is a wholly owned subsidiary of the Phoenix Group (NR), a FTSE-250 listed UK life insurance consolidator. It had AUM of GBP68.7bn as of 3Q13, a growing part of which (21%) is third-party money. RATING SENSITIVITIES 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 rating. For example, a notable structural deterioration in the fund's performance, severe drawdown, correlation increase, or departure of key investment professionals may cause Fitch to downgrade the rating. Fitch's Fund Quality Ratings combine the agency'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. For more information, please see www.fundmanagement.fitchratings.com To receive forthcoming Fund Quality Rating research, opt in at: here Contacts: Primary Analyst Alastair Sewell Director +44 20 3530 1147 Fitch Ratings Limited 30 North Colonnade London, E14 5GN Secondary Analyst Richard Woodrow, CFA Analyst +44 20 3530 1388 Committee Chairperson Ralph Aurora Senior Director +1 212 908 0528 Media Relations: Hannah Huntly, London, Tel: +44 20 3530 1153, Email: hannah.huntly@fitchratings.com. Additional information is available at www.fitchratings.com. Applicable criteria, 'Fund Quality Rating Criteria', dated 19 September 2011, are available at www.fitchratings.com. Applicable Criteria and Related Research: Fund Quality Ratings Criteria: Assessing Funds’ Investment Processes and Operational Attributes here Additional Disclosure Solicitation Status here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.