S&P: Aberdeen Sterling And Euro Liquidity Funds 'AAAm' Ratings Affirmed Following Merger
The umbrella fund, Aberdeen Liquidity Fund (Lux), is an open-ended SICAV ("societe d'investissement a capital variable") that also qualifies as an Undertakings for Collective Investment in Transferable Securities vehicle. It is authorized by the Commission de Surveillance du Secteur Financier.
Key reasons behind the merger included a rationalization of the range of collective investment schemes offered by Aberdeen Asset Management following the purchase of Scottish Widows Investment Partnership Group Ltd. in March 2014. Since then, Aberdeen had been reviewing the strategic fit of funds domiciled in Ireland within its overall business model. The conclusion was that since Aberdeen had an existing liquidity solution range based in Luxembourg, the Irish product range should be combined into the Luxembourg liquidity fund range. We had rated the Ireland domiciled Aberdeen Sterling Liquidity Fund and Aberdeen Euro Liquidity Fund since 2009 up until its merger on July 15, 2016. In each annual period since first being assigned, the fund ratings were affirmed.
Post the merger, the experienced portfolio management team at Aberdeen Asset Managers Ltd., split across London and Edinburgh, remains in place. Overall, Aberdeen Asset Management manages approximately ?292 billion in assets with ?91 billion in fixed income and ?26 billion in money market assets. In our view, the team has historically shown a demonstrable effectiveness in implementing a portfolio strategy that is consistent with the stated investment goals of the fund and we do not believe this would fundamentally change with a domicile change.
The investment objective of Aberdeen Liquidity Fund (Lux)--Sterling Fund and Euro Fund is to preserve capital and a stable value while maintaining high liquidity and achieving returns. Following the merger, the Sterling Fund has significantly increased its assets to ?15 billion (before the merger, assets were ?500 million) and the Euro Fund has seen its assets rise to approximately €900 million (before the merger, assets were €650 million).
Over the last 12 months and in accordance with our surveillance of the "receiving" funds, the average weekly exposure percentage to 'A-1+' investments was 68% (Sterling Fund) and 59% (Euro Fund). The weighted-average maturities were 52 days (Sterling Fund) and 54 days (Euro Fund). The average percentage of the portfolio maturing within seven days was 28% (Sterling Fund) and 27% (Euro Fund). The portfolio composition for both funds has remained relatively consistent during the last 12 months with allocations to highly-rated commercial paper, floating rate notes, certificates of deposit, fixed-rate bonds, and call accounts combined with the occasional use of reverse repurchase agreements to maintain a credit quality standard reflective of the assigned rating.
State Street Bank Luxembourg S. C.A is the new custodian following the merger.
S&P Global Ratings also affirmed the 'AAAm' PSFR assigned to Aberdeen Liquidity Fund (Lux) - Canadian Dollar Fund and Aberdeen Liquidity Fund (Lux) - US Dollar Fund, which were not subject to recent merger activity, and the 'AAAf' fund credit quality rating and 'S1+' fund volatility rating assigned to Aberdeen Liquidity Fund (Lux) – Ultra Short Duration Sterling Fund.
S&P Global Ratings' PSFRs, identifiable by the 'm' suffix, are assigned to funds or pools that exhibit stable net asset values. Those funds rated 'AAAm' demonstrate extremely strong capacity to maintain principal stability and to limit exposure to principal losses due to credit risk. S&P Global Ratings reviews pertinent fund information and portfolio reports on a weekly basis as part of its surveillance process.
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