OREANDA-NEWS. Fitch Ratings has published the Royal London Short-Term Money Market Fund's Money Market Fund Rating of 'AAAmmf'.

The fund is advised by Royal London Asset Management (RLAM), and is a sub-fund of the UK-domiciled OEIC, Royal London Bond Funds ICVC.

KEY RATING DRIVERS

The main drivers for the rating are:
-- The fund's high overall credit quality and diversification
-- Low exposure to interest rate and spread risks
-- High levels of overnight and weekly liquidity, with additional consideration given to the fund's highly stable current investor base
-- Maturity profiles consistent with Fitch's MMF rating criteria
-- The capabilities and resources of RLAM as investment advisor

Portfolio Credit Quality/Diversification
The fund seeks to maintain diversified, high credit quality portfolios consistent with Fitch's criteria for 'AAAmmf'-rated MMFs, by investing in highly rated securities with limited exposure to individual issuers.

The fund's Portfolio Credit Factor (PCF) was in line with Fitch's 'AAAmmf' rating criteria of 1.50 or less as of end-February 2016. The PCF is a risk-weighted measure of a fund's portfolio assets that accounts for the credit quality and maturity profile of a fund's portfolio securities.

Maturity Profile
The fund seeks to limit interest rate and spread risk by maintaining its weighted average maturity (WAM) and weighted average life (WAL) below 60 days and 120 days, respectively. The fund's WAM and WAL were 55 and 65 days respectively as of end-February 2016.

Liquidity Profile
The fund seeks to maintain sufficient levels of daily and weekly liquidity to meet investor flows. It had 22% in overnight liquidity and 26% in seven-day liquidity (including eligible assets) as of end-February 2016. Fitch has factored the fund's highly stable current investor base (comprising largely internal money as of end-February 2016) as a relevant additional rating consideration in its assessment of the liquidity risk posed by the fund.

Fund Objective
The fund seeks to provide stability of capital and to provide an income in line with money market rates while preserving capital value.

The fund's assets under management were GBP322.1m as of end-February 2016.

Investment Advisor
RLAM was established in 1988 and is part of the Royal London Group, a mutual society. Royal London is the UK's largest mutual life and pensions company. RLAM managed a total of GBP84.5bn assets as of end-December 2015, of which approximately 41% were in fixed income and 8% in cash products.

RATING SENSITIVITIES
The rating may be sensitive to material changes in the credit quality, market risk, and/or liquidity profiles of the fund. Material and continued deviations from Fitch's guidelines for any key rating driver may lead to the rating being placed on Rating Watch Negative (RWN) or downgraded.

SURVEILLANCE
To maintain Money Market Fund ratings, HSBC Bank Plc, the administrator of the fund provides Fitch with portfolio information, including details of the portfolio's holdings and credit quality. Fitch closely monitors the credit composition of the portfolio, the credit counterparties used by the manager and the overall market risk profile of the investments.