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June 26 (Reuters) - (The following statement was released by the rating agency)
Fitch Ratings assigned BlueBay Investment Grade Bond Fund’s (IGBF) an ‘Excellent’ Fund Quality Rating. The fund is managed by BlueBay Asset Management LLP.
The ‘Excellent’ rating reflects the fund’s research-driven investment approach, allowing an effective exploitation of diversified sources of fixed income returns within a well-defined risk-control framework. The rating is also supported by the depth of BlueBay’s dedicated fixed income resources. A strong track record of over 11 years allows the fund to reach the highest rating level.
BlueBay IGBF is a sub-fund of a Luxembourg Part I SICAV and is UCITS IV-compliant. Launched in November 2003, it is BlueBay’s IG flagship fund with EUR8.4bn of assets as of end-May 2014. The fund aims to generate an annual 150bp above its benchmark (iBoxx Euro Corporates TR), gross of fees, which is consistent with a 3% maximum tracking error.
The fund implements a well-balanced research-driven, capital preservation-oriented investment process combining macro, fundamental, technical and relative valuation inputs in a formalised, disciplined but also flexible and reactive manner.
Fixed income alpha sources result from the implementation of high conviction, mainly relative value trades within well-defined risk guidelines. Macro exposures and overall portfolio positioning are adjusted dynamically using a derivatives-based overlay strategy.
Lead portfolio manager (PM) and co-CIO, Raphael Robelin, has 17 years of investment experience. The fund benefits from the depth of BlueBay’s IG fixed income resources (22 PMs and analysts, with an average of 12 years’ industry experience).
Since its launch, the fund has ranked in the first quintile in the Lipper category for performance. It has exceeded its objectives, with a 2.1% (gross of fees) annualised excess return and an annualised 1.3% tracking error (as at end-May 2014). Fitch will monitor the size of the fund, which is large compared with peers, and its ability to maintain performance while managing any investor redemptions. Fitch notes that the large fund size has not adversely impacted performance to date. The fund was soft closed (i.e. limited new investments into the fund) in 2009 to protect performance, and reopened in 2011.
Founded in 2001 and now owned by the Royal Bank of Canada (AA/Stable/F1+), BlueBay Asset Management is a specialist credit asset manager with assets under management of USD62.4bn as at end-March 2014 (of which USD27.6bn were in IG sovereign and non-sovereign credit).
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. For example, this may be manifested in significant structural deterioration in the fund’s performance due to its size or redemption pressures. Fitch sees limited key person dependency given the depth of the IG team.
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.
Link to Fitch Ratings’ Report: BlueBay Investment Grade Bond Fund