Reflects the rating assigned by Standard & Poor's or Moodys to fixed-income securities. It rates the issuing entity's capacity to meet the repayment terms of the security. Bonds issued and backed by the federal government are of the highest quality and are considered superior to bonds rated AAA, which is the highest possible rating a corporate bond can receive. Investment quality ratings include AAA, AA, A, and BBB. Bonds rated BB or lower are considered high yield bonds.
Average credit quality is the weighted average of the bonds in a funds portfolio. The average credit quality of bond funds ranges from AAA (highest) to B (lowest). U.S. government bonds carry the highest credit rating, while bonds issued by speculative or bankrupt companies usually carry the lowest credit ratings.