Press Release
VIS Reaffirms Management Quality Rating of UBL Fund Managers Limited
Karachi, December 29, 2023: VIS Credit Rating Company Limited (VIS) has reaffirmed the Management Quality Rating of UBL Fund Managers Limited (UBLFM) at ‘AM1’ (AM-One). ‘AM1’ rating denotes excellent management characteristics exhibited by the asset manager. Previous rating action was announced on December 30, 2022.
Headquartered in Karachi, UBL Fund Managers Limited (‘UBLFM’ or the AMC’) is a wholly owned subsidiary of United Bank Limited (UBL). The overall Asset Management Company (AMC) industry has experienced a growth of 28.6% during FY23 while a shift toward money market funds was noted during period across the industry capitalizing on high interest rates prevailing in the market.
Rating takes into account the market share of UBLFM being among the top five players and also takes note of change in market share ranking of UBLFM to 4th position as at end Sept’23. Overall AUM mix since last review has tilted towards income and money market funds which is in line with the industry trend. The AMC’s AUM concentration of its top three funds improved and remains below peers, standing at 56.3% as of Sept’23 (June’23: 53.5%; June’22: 69.9%). Proportion of retail unit holders in the total client base is on the lower side while top ten investor’s concentration remained aligned with the peers.
The rating takes comfort from substantial growth in client base as well as AUMs from various digital platforms while noting digitalization initiatives. Two of the top three funds of the AMC in terms of AUMs has remained in the second quartile relative to peers while the third fund is positioned in the third quartile. Overall fund returns leaves room for improvement. Rating also takes into account adequate level of corporate governance, IT & audit functions and efficient investment management procedures.
In CY22, the AMC experienced 22.2% year-over-year growth in revenue, with further growth in the topline of 60.3% from Sept’22 to Sept’23. The AMC has also fully paid off its running finance facility in CY23, resulting in significant reduction in its leverage ratios and a low financial risk profile. Going forward, sustaining market share and improving funds performance will remain important rating sensitivities.
For further information on this rating announcement, please contact Mr. M. Amin Hamdani (Ext: 217) or the undersigned (Ext: 208) at (021) 35311861-4 or email at info@vis.com.pk.
Syed Asif Ali
Executive Director
Applicable Rating Criteria: Asset Management Companies
https://docs.vis.com.pk/docs/AMC-Methodology-201906.pdf
VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf
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