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Karachi, December 31, 2015 (PPI-OT): JCR-VIS Credit Rating Co. Ltd. (JCR-VIS) has reaffirmed the Management Quality (MQ) Rating of UBL Fund Managers Limited (UBL FM) at ‘AM2+’ (AM-Two Plus). Outlook on the assigned rating is ‘Stable’. The previous rating action was announced on December 31, 2014.
UBL FM has a market share of around one-tenth of industry AUMs at end-June’2015. AUMs (adjusted for fund of funds) during FY15 have grown in line with industry trends; resultantly market share has been maintained at prior year level. Adjusting for investment in associates, market share was reported higher.
Diversification in investor base has improved with increase in proportion of retail AUMs; continued focus on retail market penetration is necessary to achieve sustainable growth over the long term. Product suite of the company caters to most investor needs with significant emphasis on new product development. Investment process is formalized and well-structured while risk management and control infrastructure is adequate.
Senior management team comprises experienced professionals. Turnover has been noted at key management positions and fresh inductions have been undertaken for various vacant positions. Organization structure changes since last review include segregation of Internal Audit and Compliance function. Moreover, Research function has been made a separate independent department with reporting to the CIO. Previously, Research function was merged with the fund management function.
Management has taken a number of steps to improve confidentiality and controls for the investment trading process including addition of another dealer, well defined and stringent order communication by fund manager to dealers and volume weighted average price based executions, particularly for illiquid scrips.
Moreover, revision in employee trading policy, video recordings in the trading room, extension of audio recording feature to the entire investment department and revision of criteria for listening to call recordings have also been put in place. While measures taken to further strengthen control environment have been noted positively, any weakness in controls in the future may bring rating under pressure.
Performance of conventional equity fund under management during FY15 (July’2014 to June’2015) was in the second quartile while Al Ameen Shariah Stock Fund ranked 3rd in a pool of 11 funds. Returns have improved recently, resulting in improvement in peer ranking of equity funds during CY15 (Jan’2015 to Dec’2015). Performance of retirement and income funds compares favourably to peers. As one of the key rating parameters, JCR-VIS will continue to monitor the performance of assets under management over time; adverse trend in the same could trigger a rating review.
For more information, contact:
Ms. Sobia Maqbool
CFA
JCR-VIS Credit Rating Company Limited
VIS House, 128/C,
25th Lane off Khayaban-e-Ittehad,
Phase VII, DHA, Karachi
Tel: +92-21-35311861-72
Fax: +92-21-35311873
Email: sobia@jcrvis.com.pk