Standard & Poor's has assigned Principal Stability Fund Ratings and Fund Credit Quality & Volatility Ratings to government investment pools (GIPs) since 1994. Principal Stability Fund Ratings are assigned to stable Net Asset Value pools (i.e., $1.00 per share) and address the ability of a GIP to maintain principal value and limit exposure to loss. Fund Credit Quality and Volatility Ratings are assigned to address a GIP's credit quality., liquidity, risk parameters, and management.
Principal Stability Ratings
Definition
Ratings address the ability of a LGIP to maintain principal value and limit exposure to loss due to credit, market, and/or liquidity risk.
Scale
The rating categories range from 'AAAm' (extremely strong capacity to maintain principal stability and to limit exposure to principal losses due to credit, market, and/or liquidity risks), to 'Dm' (failure to maintain principal stability resulting in a realized or unrealized loss of principal).
Credit Quality Ratings
Derived from Standard & Poor’s historical default and transition studies and are based on an analysis of the fund's overall portfolio credit quality.
Definition
Addresses the level of protection that the fund's portfolio holdings provide against losses from credit defaults.
Scale
Rating categories range from 'AAAf' (highest level of protection against losses from credit defaults) to 'CCCf' (for funds that are extremely vulnerable to losses from credit defaults).
Volatility Ratings
Based on an analysis of a fund's investment strategy and portfolio level risk— including interest rate, credit, liquidity, concentration, call-and-option and currency risks.
Definition
Addresses the fund's sensitivity to changing market conditions.
Scale
Rating categories range from 'S1' (lowest volatility) to 'S6' (highest volatility).
