Press Release
VIS Reaffirms Management Quality Rating of Magnus Investment Advisors Limited
Karachi, April 1, 2021: VIS Credit Rating Company Ltd. (VIS) has reaffirmed the Management Quality Rating (MQR) of Magnus Investment Advisors Limited (MIAL) at ‘AM2+ (IA)’. The medium to long-term rating of ‘AM2+’ exhibits very good management characteristics. Outlook on the assigned rating is ‘Stable’. The previous rating action was announced on February 11, 2020.
MIAL has been operating for over a decade as a specialized investment advisor with experience in managing investments for institutional clients and High Net Worth (HNW) individuals. Clientele of the company mainly includes various domestic and multinational institutions.
MIAL’s overall portfolio returns were notably better in 2020 despite the equity portfolio underperforming the KSE-100 benchmark index. The blue-chip companies (stable businesses, strong balance sheet and high dividends), where MIAL’s equity portfolios are concentrated, underperformed whereas the highly leveraged cyclical companies outperformed the KSE 100 index in 2020. Returns on the fixed income component of the portfolio outperformed the approximate benchmarks. Review of the client feedback data was also indicative of strong client satisfaction. Going forward, VIS will continue to track the portfolio returns performance, and long-term continuation of the same would be considered positively.
Financial performance of the company has remained at almost similar level, with no YoY change in bottom line and efficiency ratio remaining at similar level. The topline continues to depict concentration risk, as largest 3 clients constitute a sizable proportion of the topline. Nevertheless, financial risk profile is considered low, on account of a leverage free balance sheet.
The rating assigned to MIAL continues to factor in a strong control environment, and a well-defined investment decision making framework. Policies and procedures are documented and adequately communicated to clients. In accordance with best practices, the Chairman of the Board is an independent director. However key person risk still exists, as CEO also holds the position of CIO.
For further information on this rating announcement, please contact the undersigned (Ext: 201) at 35311861-70 or fax to 35311872-3.
Faryal Ahmed Faheem
Deputy CEO
Applicable Rating Criteria: Management Quality Rating Investment Advisors
http://www.jcrvis.com.pk/Images/MQR-Mehtodology-2015.pdf