Press Release
VIS Reaffirms MQR Rating of National Investment Trust Limited (NIT)
Karachi, December 29, 2022: VIS Credit Rating Company Ltd. (VIS) reaffirmed Management Quality Rating of ‘AM1’ (AM-One) to National Investment Trust Limited (NIT). The assigned rating of ‘AM-1’ (AM-One) signifies that the asset manager exhibits excellent management characteristics. Outlook on the assigned rating is ‘Stable’. The previous rating action was announced on December 30, 2021.
Assigned rating reflects NIT’s strong niche position in the equity market with demonstrated support as a seasoned AMC with a sound performance track. Rating also incorporates NIT’s sound financial profile (excluding impact of revaluation gains and losses) and financial strength of its major shareholders, i.e. government and large commercial banks. Government control of the company provides support to its equity unitholders amidst a stock market crisis provides comfort to the ratings. The ratings take into consideration its asset-management franchise, adequate governance & control framework, sound investment administration and a well-defined investment process which has translated into competitive fund returns particularly for the largest funds under management.
In our current review, we have noted attrition in NIT’s market share mainly attributable to negative equity market movement, which tends to have a correlation with movement in total AUMs of the company as majority (60%) of the same are vested in NIT’s flagship equity fund (NIUT). Given an interest rate driven market, AUM mix of the company witnessed a change in FY22 and the ongoing year with proportion of income and money market funds growing to 33% (FY21: 22%) and contribution of equity funds declining to 65% (FY21: 76%). During the year, proportion of corporate investments increased and retail concentration reduced marginally. However, investor granularity and retail mix is comparable to peers. At end-FY22, SMA portfolio of the company, concentrated in a single investor, was sizeable to the tune of ~Rs. 76.6b.
A sizeable weightage lies on the performance of the single largest fund- NIUT which ranked in the first quartile during FY22 despite volatility in equity market. Performance of remaining funds was satisfactory in comparison to peers with a total of 93% (FY21: 80%) of AUMs classifying in the first quartile. During the period under review, NIT launched an Islamic Money Market Fund and Social Impact Fund. Management’s focus going forward is towards Islamic income, money market, pension funds along with Real Estate Funds that takes exposure in REITs.
Rating incorporates NIT’s extensive outreach with a network of 27 branches spread nationwide including an investors’ facilitation center. NIT has its web portal and mobile application (both android & ios) in place for smooth account opening and investment & redemption processing. At end-Oct’22, the AMC has significant active users on the digital platform comprising web-portal and mobile app. Currently on monthly average more than 20% of the transactions are being performed digitally. In Order to facilitate our clients and prospects, NIT has also extended its reach through social media platforms like Facebook, LinkedIn, Instagram, etc. Currently NIT is an only AMC who is offering VPS through digital platform.
The assigned rating remains dependent on maintaining the sound governance structure, improving market positioning and maintaining fund performance in line with peers.
For further information on this rating announcement, please contact Ms. Asfia Aziz (Ext: 213) or the undersigned (Ext: 201) at (021) 35311861-66 or email at info@vis.com.pk
Javed Callea
Advisor
Applicable Rating Criteria: Asset Management Companies (June 2019)
https://docs.vis.com.pk/docs/AMC-Methodology-201906.pdf