Nov 7 (The following statement was released by the rating agency)
Fitch Ratings has published Petercam L Bonds
Government Sustainable's (PGS), a fund managed by Petercam Institutional Asset
Management (Petercam IAM), 'Strong' Fund Quality Rating.
The 'Strong' rating reflects the fund's disciplined responsible investment (RI)
approach, guided by an independent Advisory Board, combined with allocation and
duration positioning by three experienced portfolio managers (PMs).
KEY RATING DRIVERS
PGS is a UCITS IV-compliant Luxembourg SICAV with EUR157m of assets as of
end-September 2013, investing in euro-denominated sovereign bonds issued by OECD
The fund's investment philosophy is that countries engaging in sustainable
development will have a positive impact on their creditworthiness over the
long-term. An independent Fixed Income Sustainable Advisory Board conducts
quantitative analysis across 52 criteria to generate a ranking of OECD countries
by sustainability metrics. The top 50% of countries by ranking are eligible for
investment. The PMs take investment decisions with input from Petercam's
economists. The PMs aim to weight towards countries with the highest RI
rankings, although availability of euro-denominated issues is a consideration.
Duration, country allocation and issue selection decisions are taken
collectively by three portfolio managers (PMs), which includes Petercam's Fixed
Income Chief Investment Officer (CIO) who has been involved in the management of
the fund since inception and has 27 years investment experience. Petercam has a
separate macroeconomics team of two, whose analysts have investment experience
of eight and 14 years respectively. Petercam also employs a dedicated RI
co-ordinator, who sits on the Advisory Board in conjunction with two additional
Petercam staff and three independent experts.
An independent investment risk team of six oversees and challenges PMs'
decisions, making full use of third-party risk analytics such as Barclays POINT.
Petercam IAM has outsourced its middle office and IT functions to Lombard Odier
Launched in December 2007, the fund has achieved Lipper Leader Consistent Return
scores of 2 and 5 over three and five years respectively. Over five years, the
fund has returned 30.8% versus 28.2% for the JP Morgan EMU Government index,
with an annualised volatility 21 basis points lower.
A large component of short-term fund performance is driven by duration
decisions. The sustainability criteria implemented is based on long-term
metrics, and short-term performance may lag therefore. The fund is likely to
underperform in a rising interest rate environment given its current duration
Petercam IAM is wholly owned by Petercam SA, which was founded in 1968 and 70%
of the equity is owned by 13 partners. It had EUR13.6bn assets under management
(AUM) as at June 2013, with EUR1.3bn invested in eurozone government bonds. The
company's historical focus has been in European assets and investors.
The rating may be sensitive to material changes in the investment or operational
processes or resources dedicated to the fund. A material adverse deviation from
Fitch's guidelines for any key rating driver could result in a downgrade of the
rating. For example, this may be manifested in significant structural
deterioration in the fund's performance or departure of key investment
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
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Link to Fitch Ratings' Report: Petercam L Bonds Government Sustainable