what is a aaa tranche 
most pooled fixed income investments consist of tranches each assigned with a credit rating tranches assigned a aaa rating are of the best quality meaning they are the least risky but also will have the lowest return sometimes a large corporation project or sovereign government may require large amounts of funds banks may work together to offer funds and create pro rata tranches pro rata tranches will also have a credit rating assigned to it the bottom linetranches allow investors to choose the level of risk and return when investing in pooled securities those seeking higher returns will opt for higher risk tranches such as those containing below investment grade securities those seeking safer returns will opt for investment grade tranches 