Standard & Poor's Ratings Services said today that it has assigned its highest principal stability fund rating of 'AAAm' to LGIM US Dollar Liquidity Fund, a money market subfund of the Irish-domiciled umbrella fund, LGIM Liquidity Funds PLC.
The assigning of this rating coincides with the launch of the subfund today.
The rating is based on Standard & Poor's analysis of the subfund's credit quality, liquidity, market price exposure, and management.
Legal & General Investment Management Ltd., investment manager and promoter of the LGIM US Dollar Liquidity Fund, has established this new liquidity subfund to extend its institutional money market fund range with a U.S. dollar-denominated product, which aims to provide investors with capital stability, liquidity, and income. The assigned rating reflects our view of the subfund's extremely strong capability to maintain principal stability and to limit exposure to principal losses due to credit risk.
The subfund is managed by an experienced team of investment professionals dedicated to money market fund management at London-based Legal & General Investment Management Ltd., the asset management arm of Legal & General Group PLC (A/Stable/A-1). The investment team operates under conservative investment practices and strict internal controls to meet the subfund's objectives. This team is also responsible for the management of two other money market subfunds of LGIM Liquidity Funds PLC: the LGIM Sterling Liquidity Fund and the LGIM Euro Liquidity Fund (which Standard & Poor's rates 'AAAm').
The LGIM US Dollar Liquidity Fund will invest in a highly diversified portfolio of high-quality, short-term securities and money market instruments including commercial paper, certificates of deposit, bank deposits, and fixed- and floating-rate government and corporate bonds. We understand that the subfund will maintain strong credit quality standards by investing all of its assets in securities or with counterparties that Standard & Poor's rates at least 'A-1', or of equivalent credit quality. To enhance the portfolios' liquidity and diminish sensitivity to changing interest rates, the subfund will maintain a weighted average maturity of 60 days or less. The LGIM US Dollar Liquidity Fund targets a stable $1.00 net asset value per share and the subfund will be managed so as to maintain a 'AAAm' principal stability fund rating. Standard & Poor's will review pertinent subfund information and portfolio reports on a weekly basis as part of its surveillance process.
LGIM Liquidity Funds PLC is an open-ended investment company with variable capital, constituted as an umbrella fund under the laws of Ireland. It is authorized by the Central Bank of Ireland as an Undertaking for Collective Investments in Transferable Securities (UCITS) under the European Communities UCITS Regulations, 2003. The custodian and the administrator of LGIM Liquidity Funds PLC are Northern Trust Fiduciary Services (Ireland) Ltd. and Northern Trust International Fund Administration Services (Ireland) Ltd., respectively. Both entities are subsidiaries of Northern Trust Corp. (AA-/Stable/A-1+).
Standard & Poor's principal stability fund ratings, identifiable by the 'm' suffix, are assigned to funds or pools that exhibit stable net asset values. Those funds rated 'AAAm' exhibit a superior ability to limit exposure to loss, and to maintain a constant or rising net asset value per share at all times, according to our criteria.
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