Press Release
VIS Reaffirms Management Quality Rating of UBL Fund Managers Limited
Karachi, December 30, 2022: VIS Credit Rating Company Ltd. (VIS) has reaffirmed the Management Quality Rating of UBL Fund Managers Limited (UBL FM) at ‘AM1’ (AM-One). ‘AM1’ rating denotes excellent management characteristics exhibited by the asset manager. Outlook on the assigned rating remained same at ‘Stable’. Previous rating action was announced on December 31, 2021.
The assigned ratings incorporate UBL FM’s market position as the third largest AMC in the industry at end FY22 reflecting higher market share of 11.01% (FY21: 9.7%); however, the same reduced to 9.55% at end-Oct’22 due to redemptions in UBL cash fund by corporates to finance their liquidity constraints. Overall AUM mix since last review depicts shift from Equity & Fixed Income funds towards Money market & Fixed Income funds (FY22: 87%, FY21: 76%). As per management, focus going forward will be towards money market and pension funds. During the review period, SMA portfolio performed well above the benchmark return.
Rating takes into account the presence of a formalized and documented investment process with sound investment research infrastructure. Corporate Governance framework in place is considered adequate, with Board & Board Committees being in place. Rating also factors in UBL FMs efforts to increase outreach through increased digitalization, which shall remain the key focus area over the medium term. The Company is aggressively focusing on several digital solutions to enhance retail clientele.
On the fund performance front, around 12% of the AUMs posted returns in the first quartile during FY22. Equity funds of the Company performed relatively well with returns of the same reported in the first quartile during the review period, despite depressed overall equity market performance. Improving fund performance across all categories over the rating horizon will be important from ratings perspective.
Assessment of financial risk profile incorporates improving profitability profile, adequate efficiency, and manageable capitalization indicators. Profitability in CY21 improved on account of higher core income and rationalization of expenses with the same further increasing in 9M2022 gaining support from return on sale of investments despite higher finance costs on short term borrowings. Conservative capital structure lends support to financial profile. The assigned rating remain dependent on recouping market position and maintenance of AUM profile along with improvement in overall fund performance.
For further information on this rating announcement, please contact Ms. Asfia Aziz (Ext: 212) or the undersigned (Ext: 207) at (021) 35311861-66 or email at info@vis.com.pk.
Sara Ahmed
Director
Applicable Rating Criteria: Asset Management Companies (June 2019)
https://docs.vis.com.pk/docs/AMC-Methodology-201906.pdf