The 2008 financial crisis brought the far-reaching influence of credit ratings on capital
markets into focus and confirmed doubts about the quality of ratings published by rat-ing
agencies. In the context of regulatory efforts to limit the influence of ratings Marius Müller
addresses the question to what extent investment funds are obliged to sell bonds that no longer
comply with investment guidelines following a rating downgrade. Results of a statistical
analysis of 200 European and U.S. fund prospectuses are evaluated in the light of regulatory
objectives. Subsequently a structural proposal for the formulation of investment guidelines is
developed accounting for the protection of investor interests and market functioning.
