Standard & Poor's assigns credit quality and volatility ratings to bond funds and other managed pools of 'fixed income' assets. The credit quality rating assigned to a fund addresses the level of protection its portfolio holdings provide against losses from credit defaults. Credit quality ratings, which range from 'AAAf' (highest level of protection) to 'CCCf' (least protection), are based on an analysis of the fund's overall portfolio credit quality. Volatility ratings offer a current opinion of fund's sensitivity to changing market conditions. Volatility ratings, which range from 'S1' (lowest volatility) to 'S6' (highest volatility), are based on an analysis of a fund's investment strategy and portfolio level risk, including an interest-rate risk, credit quality, liquidity, concentration, call and option risk, and currency risk.
The effects of various portfolio strategies, such as the use of leverage, hedging, and derivative instruments, are also factored into the rating. The goals of Standard & Poor's analysis are to uncover risk sources in a managed fund's portfolio and investment strategies and to assess the potential impact on its rate of return and net asset-value variability. Standard & Poor's monitors each fund's portfolio holdings on a monthly basis to maintain current and accurate assessments of its credit quality and volatility profile.
Standard & Poor's Fixed Income Funds
Credit Quality Ratings - Address the level of protection the fund's portfolio holdings provide against losses from credit defaults.
Volatility Ratings - Address the fund's sensitivity to changing market conditions.
