Press Release
JCR-VIS Reaffirms Management Quality Rating of JS Investments Limited
Karachi, June 26, 2013: JCR-VIS Credit Rating Company Ltd. (JCR-VIS) has reaffirmed the Management Quality Rating of JS Investments Limited (JSIL) at ‘AM2-’ (AM-Two Minus) with a ‘Stable’ Outlook.
The reaffirmation takes into account strengthening of the company’s corporate structure as well as internal controls since the management change at JSIL and management’s plans for the future. Shareholding pattern of JSIL has experienced change, with JS Bank Limited now having majority stake in the company as a result of restructuring at the group level. As per management, having a commercial bank as its main sponsor will facilitate the company in enhancing its outreach in the retail segment as well as improving client services. A formal agreement with the bank has already been initialed to promote schemes managed by JSIL. Product offering of the AMC includes thirteen funds in almost all categories including balanced, asset allocation, equity, and fixed income, fund of funds, index tracker and pension schemes.
The AMC has recently initiated optimization of its product offering with a view to synergize the company’s market outreach efforts. A Shari’ah compliant Sovereign Income Fund has been recently launched to strengthen the Islamic product offering segment. Winding up of one existing fund has been completed. Merger of two funds having low asset base is on the anvil.
The AMC works with the philosophy of empowering fund managers to a greater extent vis-à-vis what is generally practiced in the local asset management industry. Fund managers are encouraged to pursue independent views. Performance of funds under management has generally experienced an uptick since the new management took charge. Given the quality of assets carried by the income fund, downside risk is considered limited. The balanced fund under management has consistently posted strong performance. In case of equity funds & money market fund, returns have mostly been close to peer group median.
The research department provides considerable support to the investment management function. Detailed reports on various parameters are now being prepared by the research department. Risk and research functions at JSIL have recently been segregated, in line with best practices. On account of continued redemptions in open-end schemes coupled with maturity of JS-PSF I, assets under management (AUMs) showcased decline in FY12; though the same have grown subsequently, given fresh investment in JS-CF and recovery in the stock market.
Given the efforts undertaken by the current management, JCR-VIS believes that the company’s ability to manage funds has improved over time. In a recent development, the Securities & Exchange Commission of Pakistan (SECP) has filed a complaint against several parties including JSIL. The management has obtained a stay order against court proceedings. In line with applicable rating methodology, JCR-VIS will continue to track future developments in this regard. The matter pertains to the time period prior to current management assuming office; the current management has instituted sound governance standards.
For further information on this rating announcement, please contact the undersigned (Ext: 501) or Ms. Sobia Maqbool, CFA (Ext: 604) at 35311861-70 or fax to 35311872-3.
Javed Callea
Advisor