Softlogic Money Market Fund

ICRA Lanka assigns [SL]Amfs rating to Softlogic Money Market Fund

InstrumentRated Amount (LKR Mn)Rating Action
Softlogic Money Market FundN/A[SL]Amfs; assigned

Rationale and Key Rating Drivers

ICRA Lanka Limited has assigned a credit risk rating of [SL]Amfs (pronounced as Sri Lanka A mutual fund scheme) to the Softlogic Money Market Fund (SMMF or “Fund”) which is managed by Softlogic Asset Management (Pvt) Ltd (the asset management company). Schemes with this rating are considered to have adequate degree of safety regarding timely receipt of payments from the investments that they have made. The assigned rating is based on the Fund’s portfolio with the credit score being comfortable at the assigned rating level.

The rating indicates ICRA Lanka’s opinion on the credit quality of the portfolio held by the fund. It does not indicate the Fund’s willingness or ability to make timely payments to the fund’s investors. The rating should not be construed as an indication of expected returns, prospective performance of the mutual fund scheme, net asset value (NAV) or volatility in its returns.

ICRA Lanka’s mutual fund rating methodology is based on evaluating the inherent credit quality of the fund’s portfolio. As a measure of the credit quality of a debt fund’s assets, ICRA Lanka uses the concept of “credit scores”. These scores are based on ICRA Lanka’s estimates of the credit risk associated with each exposure of the portfolio taking into account its maturity. To quantify the credit risk scores, ICRA Lanka uses its database of historical default rates for various rating categories and maturity buckets. The credit risk ratings incorporate ICRA Lanka’s assessment of a debt fund’s published investment objectives and policies, its management characteristics, and the creditworthiness of its investment portfolio. ICRA Lanka reviews relevant fund information on an ongoing basis to support its published rating opinions. If the portfolio credit score meets the benchmark of the assigned rating during the review, the rating is retained. In an event that the benchmark credit score is breached, ICRA Lanka gives a month’s time to the debt fund manager to bring the portfolio credit score within the benchmark credit score. If the debt fund manager is able to reduce the portfolio credit score within the benchmark credit score, the rating is retained. If the portfolio still continues to breach the benchmark credit score, the rating is revised to reflect the change in credit quality.

Outlook: Not applicable

Liquidity position: Not applicable

Analytical approach:

Analytical ApproachComments
Applicable Rating MethodologiesICRA Lanka’s Mutual Fund Credit Risk Rating Methodology
Parent/Group SupportNot applicable
Consolidation / StandaloneNot applicable

About the Company

Softlogic Asset Management (Pvt) Ltd

Softlogic Asset management (Pvt) Ltd operates as a Unit Trust Fund Manager which is licensed and regulated by the Securities and Exchange Commission of Sri Lanka (SEC).  Softlogic Asset Management (Pvt) Ltd had total assets under management (AUM) of LKR 1,126 Mn as in January 2021. Softlogic Asset Management (Pvt) Ltd acts as the investment manager to the Softlogic Fund.

Softlogic Money Market Fund

Softlogic Fund is an open-ended unit trust Fund approved by the Securities and Exchange Commission of Sri Lanka (SEC). Softlogic Fund was launched in July 2020. The fund invests in Government treasury bills, bonds and other government securities, investment grade corporate debt securities such as debentures, commercial papers, securitization papers and repurchase agreements with maturities of less than one year which can be readily convertible to cash.

The overall objective of the Fund is to earn an optimal return of interest income while preserving investor capital and liquidity. The Fund’s assets under management stood at ~ LKR 1,011 Mn as on January 31, 2021 with an average residual maturity of around 06 months.

Key financial indicators: Not applicable
Any other information: None
Rating history for the last three years:


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