Fitch Affirms Yapi Kredi's Private Banking Variable Growth Fund at 'Satisfactory'

Wed Aug 27, 2014 10:02am EDT

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(The following statement was released by the rating agency) Link to Fitch Ratings' Report: Yapi Kredi Bank Fixed Income Private Banking Variable Growth Fund here PARIS, August 27 (Fitch) Fitch Ratings has affirmed Yapi Kredi's Private Banking Variable Growth Fund's 'Satisfactory' Fund Quality Rating. The fund is managed by Yapi Kredi Portfoy. KEY RATING DRIVERS The 'Satisfactory' rating reflects the disciplined approach to its selection of fixed-income instruments, its monitoring of asset allocation and duration management. The rating is also supported by the depth of Yapi Kredi's dedicated investment resources as well as by its solid expertise and depth of experience in the domestic market. The 'Satisfactory' rating also takes into account challenges from rapidly evolving market segments that demand a greater research capacity. FUND PRESENTATION Launched in 2005, the fund is a Turkish-domiciled, regulated open-ended fund with TRY55m of assets, as of end-July 2014. It is a conservative balanced fund, investing primarily in domestic public and private sector fixed-income instruments (minimum 70%) and also in higher-risk asset classes such as equities, gold or foreign exchange for yield enhancement. INVESTMENT PROCESS The fund's core approach is a traditional top-down driven fundamental and macroeconomic analysis for duration management and yield curve positioning. Fixed-income selection uses a bottom-up approach and non-fixed income selection is supported by asset class specialists. Investment decisions are taken at a weekly committee that sets allocation bands for fixed- income exposure, asset type and duration. The lead portfolio manager (PM) is given some autonomy to operate within given guidelines. RESOURCES The fund is managed in a consensual manner and benefits from the depth of Yapi Kredi Portfoy's investment and support functions. The lead PM has managed the fund since 2011 and has 11 years of experience with the company. The co-manager (and former lead PM) is Head of Yapi Kredi Portfoy's fixed-income department with more than 18 years of experience. The equity part is co-managed by Head of the equity and balanced team. Yapi Kredi Portfoy's IT platform is overall robust and matches the requirements of the fund. TRACK RECORD The fund has delivered consistent risk-adjusted returns since inception relative to peers, as indicated in its Lipper score of four over a five-year period. However, over three and five years the fund's net performance was below its benchmark, which was last amended in January 2014 to 75% KYD-547 Bond Index, 10.5% KYD O/N Repo Index (Gross), 4% KYD-CORP Index Fixed, 1% KYD-CORP Index Floating, 7.5% BIST 100 Index, 1% KYD Eurobond Index USD-TRY, and %1 KYD Gold Index. FUND MANAGER Yapi Kredi Portfoy (Asset Manager Rating 'Highest Standards (tur)'), part of the Koc Group, was established in 2002. It is one of Turkey's leading asset managers with TRY11.5 bn assets under management as of July 2014. The company has a long track record of managing domestic fixed-income and money market assets, which together represent around 90% of assets under management. RATING SENSITIVITIES The rating may be sensitive to material changes in the investment or operational processes or in the resources dedicated to the fund. A material adverse deviation from Fitch's guidelines for any key rating driver could result in a downgrade. For example, this may be manifested in significant structural deterioration in the fund's performance or excessive risk-taking. Fitch sees limited key person dependency given the depth of the investment team. Conversely, an upgrade could result from a demonstrated ability to outperform its peers consistently on a risk- adjusted basis over five years. 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. For more information, please see www.fundmanagement.fitchratings.com To receive forthcoming Fund Quality Rating research, opt in here Contacts: Primary Analyst Manuel Arrive, CFA Senior Director +33 1 44 29 91 77 Fitch France S.A.S. 60 rue de Monceau Paris 75008 Secondary Analyst Richard Woodrow, CFA Associate Director +44 203 530 1388 Committee Chairman Alastair Sewell, CFA Senior Director +44 203 530 1147 Media Relations: Elaine Bailey, London, Tel: +44 203 530 1153, Email: elaine.bailey@fitchratings.com. Additional information is available at www.fitchratings.com. Applicable criteria, 'Fund Quality Ratings 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 Yapı Kredi Portföy Yönetimi A.Ş. 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.

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