OREANDA-NEWS. Fitch Ratings has affirmed Aberdeen Sterling Investment Cash Fund (Aberdeen Sterling ICF)'s Fund Credit Quality and Volatility Ratings at 'AAA'/'V1'. The fund is a sub-fund of Ireland-domiciled Aberdeen Investment Cash OEIC plc managed by Aberdeen Asset Investments Ltd.

KEY RATING DRIVERS
The main drivers of the Fund Credit Quality Rating affirmation are:
-- The high average credit quality of the fund's portfolio of assets as measured by its weighted average rating factor (WARF)
-- The distribution of asset ratings and investment guidelines limiting the minimum rating of assets and counterparties to 'A-' (or equivalent)
-- Portfolio diversification

The main drivers of the Fund Volatility Rating affirmation are:
-- The fund's low exposure to interest rates with duration maintained below one year
-- Contained spread duration exposure

ASSET CREDIT QUALITY
The fund's weighted average credit quality is high as indicated by its WARF, which was 0.35 at end-May 2015. The fund invests in a diversified portfolio of assets, typically comprising certificates of deposit, commercial papers, time deposits, fixed- and floating-rate government and corporate bonds, including covered bonds, and asset-backed securities (ABS). Underlying counterparties and securities must carry a minimum rating of 'A-'/'F1' (or equivalent) at time of purchase.

At end-May 2015, the fund was invested in 64 issuers, of which 30% were rated 'AAA' and the minimum credit quality of assets was 'A-'. ABS investments are in prime European - typically UK - RMBS and credit card ABS, which carry a minimum rating of 'AAA'.

The top five issuer exposures comprised 20.7% of the portfolio as of end-May 2015. Under the fund's investment guidelines, concentration per issuer or counterparty is limited to no more than 5% of the fund's net assets, unless the exposure is to overnight deposits, which may account for up to 10%, or government debt.

PORTFOLIO SENSITIVITES TO MARKET RISKS
The fund has low exposure to interest rate and spread risks. Interest rate risk is managed within a maximum duration of one year and is typically maintained well below that limit. At end-May, the fund had a WAM of 99 days and weighted average life (which measures sensitivity to spread risk) of 407 days with 65% of total assets maturing within one year. This resulted in a Market Risk Factor well within the 'V1' Fund Volatility Rating range.

Maturity of investments is limited to three and five years for fixed-rate and floating-rate instruments, respectively. The fund does not use leverage and is not exposed to currency risk as it only invests in sterling-denominated securities.

Liquidity and spread risk that may stem from ABS exposure is limited as the fund's allocation to these assets may not account for more than 15% of the portfolio's total assets (10.8% at end-May 2015).

FUND PROFILE
Aberdeen Sterling ICF is a sub-fund of Ireland-domiciled Aberdeen Investment Cash OEIC plc, an umbrella-type open-ended investment company pursuant to the UCITS regulation. As of end-May 2015, the fund's total assets stood at GBP4.9bn.

THE ADVISOR
Aberdeen Asset Investments Limited, the fund's investment manager, has been a wholly-owned subsidiary of Aberdeen Asset Management Ltd (Aberdeen, A/Stable/F1) since April 2014, when the Lloyds Banking group sold its participation in Scottish Widows Investment Partnership Limited (SWIP.). Aberdeen and SWIP asset management activities, resources and operational platforms are now integrated. Aberdeen managed GBP331bn of assets globally at end-March 2015, of which 22% was fixed income and money market assets.

RATING SENSITIVITIES
The ratings may be sensitive to material changes in the fund's credit quality or market risk profile. A material adverse deviation from Fitch guidelines for any key rating driver could cause Fitch to downgrade the ratings. For example, if credit deterioration occurs such that the weighted average rating factor increases beyond criteria levels for a 'AAA' Fund Credit Quality Rating, the rating may be downgraded. Potential downgrades to the Fund Volatility Rating are limited in scope, given the fund's low sensitivity to interest rate and spread risks, and the fund's investment guidelines.

To maintain the fund's ratings, Fitch receives monthly fund and portfolio holdings information from the fund's administrator, State Street Fund Services (Ireland) Limited, and conducts surveillance checks against its ratings criteria.