Fitch releases global bond fund rating criteria

Fitch Ratings released criteria for assigning fund credit and volatility ratings to short-term bond funds.

The criteria are global and apply to short-term bond funds as well as local government investment pools (LGIPs) and other operating pools managed by or on behalf of public sector entities.

Short-term bond funds primarily invest in various fixed-income instruments, such as banks' deposits, commercial paper, corporate bonds, notes and loans, sovereign debt and structured finance securities generally maturing in three years or less.

The funds considered in the report normally exhibit weighted average portfolio maturities of two years or less. Highly rated short-term bond funds are expected to offer a degree of liquidity and limited downside risk to fund net asset value (NAV), and are assigned Fund Credit and Fund Volatility ratings.