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ICRA Lanka assigns [SL]Amfs rating to Softlogic Money Market Fund

18 Mar 2021

ICRA Lanka Ltd. has assigned a credit risk rating of [SL]Amfs  to the Softlogic Money Market Fund (SMMF), which is managed by Softlogic Asset Management (Pvt.) Ltd.  Schemes with this rating are considered to have adequate degree of safety regarding the timely receipt of payments from the investments that they have made. The assigned rating is based on the Fund’s portfolio, with the credit score being comfortable at the assigned rating level.  The rating indicates ICRA Lanka’s opinion on the credit quality of the portfolio held by SMMF. It does not indicate SMMF’s willingness or ability to make timely payments to investors. The rating should not be construed as an indication of expected returns, prospective performance of the mutual fund scheme, net asset value (NAV) or volatility in its returns.  ICRA Lanka’s mutual fund rating methodology is based on evaluating the inherent credit quality of the fund’s portfolio. As a measure of the credit quality of a debt fund’s assets, ICRA Lanka uses the concept of “credit scores”. These scores are based on ICRA Lanka’s estimates of the credit risk associated with each exposure of the portfolio taking into account its maturity.  To quantify the credit risk scores, ICRA Lanka uses its database of historical default rates for various rating categories and maturity buckets. The credit risk ratings incorporate ICRA Lanka’s assessment of a debt fund’s published investment objectives and policies, its management characteristics, and the creditworthiness of its investment portfolio. ICRA Lanka reviews relevant fund information on an ongoing basis to support its published rating opinions. If the portfolio credit score meets the benchmark of the assigned rating during the review, the rating is retained. In an event that the benchmark credit score is breached, ICRA Lanka gives a month’s time to the debt fund manager to bring the portfolio credit score within the benchmark credit score.  If the debt fund manager is able to reduce the portfolio credit score within the benchmark credit score, the rating is retained. If the portfolio still continues to breach the benchmark credit score, the rating is revised to reflect the change in credit quality.


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