Rating downgrade
Ratings house Morningstar has further downgraded its assessment of Basis Capital’s Yield Fund from ‘hold’ to ‘avoid’.
In a new rating issued late yesterday, Morningstar suggested that those invested in the Yield Fund “put in their withdrawal requests now”.
The ratings house said in its assessment that investors had had no choice but to stand by and watch after Basis Capital suspended redemptions from its Yield Fund in July, and with the fund effectively being wound up, investors were recommended to put in their redemption requests.
Morningstar said that the success of the Yield strategy had been tied intimately to the state of credit markets and this had propelled it forward to post 20 per cent annual gains in the early to mid 2000s.
“But when liquidity dried up during the credit crunch in mid-2007, the strategy entered perilous waters,” it said.
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Mike Taylor
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