Mutual Funds – Credit Rating Breakdown

Credit Rating breakdown is applicable for bond/fixed income funds. It gives an idea of what quality of bonds a fund is investing in. That in turn gives a measure of risk reward ratio when compared with the fund’s performance.

Credit rating of a security is the credit worthiness of the issuer i.e. the rating is given based on the issuer’s ability to repay the principle and timely payment of coupons. Moody and S&P are famous international standard credit rating agencies. 

The credit rating breakdown of a fund can be any single agency specific rating or a combination of the ratings given to the securities which the fund is investing in by different agencies.

Example: Sample S&P credit rating breakdown information of a fund.

AAA 60%
AA    5%
A       20%
BBB   4%
BB      6%
B         1%
CCC   1%
CC     1%
 

 

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January 3, 2010 | Filed Under Mutual Funds 

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