(The following statement was released by the rating agency)
Link to Fitch Ratings' Report: Ignis Absolute Return Government
LONDON, January 07 (Fitch) Fitch Ratings has assigned Ignis
Government Bond Fund a 'Strong' Fund Quality Rating. The fund is
Ignis Investment Services Limited (NR).
KEY RATING DRIVERS
The 'Strong' Fund Quality Rating reflects the fund's
approach that exploits seven different and uncorrelated risk
buckets and is
supported by advanced proprietary technology.
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
management (AUM) as of end-December 2013.
The investment process aims to identify macro-economic themes,
expresses in forward rate terms over a six-month investment
horizon. The focus
on forward rates, as opposed to duration based, market and
differentiates the fund. This approach allows the fund to
curves and pinpoint the precise exposures it desires on
different curves, based
on its macro-economic views and strength of short-term
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
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
portfolio management tool allowing the investment team to
exposures in forward rate terms. It also has a "trade optimiser"
which calculates the minimum number of trades needed to
portfolio. This tool differentiates the process. It is based in
and supported by the team's quantitative analysts.
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
Stuart Thompson who has 28 years' experience and a quantitative
of three led by Adam Purzitsky, who holds a PhD in economics.
There is an
independent risk management team of seven.
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
the diversification benefits of effectively uncorrelated
and adherence to the fund's philosophy, albeit over a limited
period to date.
Ignis is a wholly owned subsidiary of the Phoenix Group (NR), a
UK life insurance consolidator. It had AUM of GBP68.7bn as of
3Q13, a growing
part of which (21%) is third-party money.
Fund quality ratings may be sensitive to material changes in the
operational processes or market risk profiles of the fund. A
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
Fitch's Fund Quality Ratings combine the agency's experience in
analysis with rankings and performance data from Lipper, a
company. Fitch's Fund Quality Ratings offer an independent,
assessment of a fund's key performance and risk attributes and
longer-term returns, relative to peer group or benchmarks. The
ratings focus on
the fund manager's investment process, key fund performance
management, and the quality of the fund's operational
For more information, please see
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Richard Woodrow, CFA
+44 20 3530 1388
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Media Relations: Hannah Huntly, London, Tel: +44 20 3530 1153,
Additional information is available at www.fitchratings.com.
Applicable criteria, 'Fund Quality Rating Criteria', dated 19
are available at www.fitchratings.com.
Applicable Criteria and Related Research:
Fund Quality Ratings Criteria: Assessing Fundsâ€™ Investment
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