May 30, 2013 / 8:44 AM / 4 years ago

RPT-Fitch assigns Yapi Kredi Bank's equity fund 'strong' fund quality rating

May 30 (Reuters) - (The following statement was released by the rating agency)

Fitch Ratings has assigned Yapi Kredi Bank's Equity Fund, a fund managed by Yapi Kredi Portfoy, a 'Strong' Fund Quality Rating.

KEY RATING DRIVERS

The rating reflects the fund's disciplined approach to its selection and monitoring of asset allocation. Decisions concerning market exposure are driven by a fundamental, macroeconomic assessment, supplemented by technical and sentiment analysis, to take account of volatility in the Turkish equity market.

In its stock selection the fund focuses on identifying primarily mid and large cap companies with strong fundamentals and reasonably priced growth opportunities relative to their market valuation.

Decision making is concentrated in a formal investment committee which convenes on a weekly basis and combines the manager's investment expertise across assets classes. Defined allocation bands and active stock selection are key drivers in the portfolio construction process. The lead PM enjoys controlled freedom to operate within the given guidelines. The fund operates a distinct stop loss discipline under supervision of the independent risk department beyond tracking error and vale at risk limits.

The fund has outperformed the Lipper category "Global Equity Turkey" on both a three and five year basis at end April 2013. Fitch notes that the category is less homogenous as Turkish domiciled funds do not offer institutional share classes which would demand lower fees. The fund shows a Lipper Leader Consistent Return score of five (highest quintile) over three years and a score of three over five and 10 years as at end April 2013.

The fund, launched in November 1996, is managed against the Istanbul Stock Exchange (ISE) 100 index. Its equity exposure may vary between 75% and 100%. The current lead portfolio manager (PM) who is fully accountable joined the firm in 2002 and manages the fund since June 2010. The co-manager is the head of Yapi Kredi Portfoy's equity department with more than 20 years of investment management and research experience. The overall investment process has been broadly stable since inception, but the fund changed its benchmark, partly on regulatory grounds in January 2012. It increased the benchmark equity share to 85 % (from 70 %). The Yapi Kredi Bank's Equity Fund is Turkish domiciled fund, with TRY26.9m of assets, as of end-April 2013.

Yapi Kredi Portfoy (Asset Manager Rating 'Highest Standards(tur)') is one of Turkey's market leaders in the asset management industry with TRY10.2bn assets under management (AuM) as of end-March 2013. The company has a long track record of managing domestic equities. In line with a relatively small share of equity funds in the industry, the equity team currently manage a total of around TRY869m.

Fitch's Fund Quality Ratings combine Fitch's experience in qualitative fund analysis with rankings and performance data from Lipper, a Thomson Reuters company. Fitch's Fund Quality Ratings offer an independent, forward-looking assessment of a fund's key performance and risk attributes and consistency of longer-term returns, relative to peer group or benchmarks. The ratings focus on the fund manager's investment process, key fund performance drivers, risk management, and the quality of the fund's operational infrastructure. For more information, please see www.fitchspotlight.com/FQR.

RATING SENSITIVITIES

Fund quality ratings may be sensitive to material changes in the investment or operational processes or market risk profiles of the fund. A material adverse deviation from Fitch's guidelines for any key rating driver could cause Fitch to downgrade the ratings. For example, notable structural deterioration in the fund's performance or departure of key investment professionals may cause a lower rating. For additional information about Fitch's fund quality ratings guidelines, please review the criteria referenced below.

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