Press Release

JCR-VIS reaffirms Management Quality Rating of UBL Fund Managers Limited at AM2

Karachi, April 20, 2011: JCR-VIS Credit Rating Co. Ltd. (JCR-VIS) has reaffirmed the Management Quality (MQ) Rating of UBL Fund Managers Limited (UBL Funds) at ‘AM2’ (AM-Two). Outlook on the rating is ‘Stable’.

Composition of the Board of Directors of UBL Funds has witnessed changes and now includes two independent members, including the Chairman, out of the seven member Board. The Board Audit Committee is also chaired by an independent director. With a view to improve quality of decisions, structural changes have been made at UBL Funds to improve investment decision making process. Changes to the organizational infrastructure also include in-house set up of internal audit, and separation of compliance and risk management functions. The Board is also actively monitoring operations, through Board level risk and audit committees. UBL Funds has started reporting GIPS compliant investment results, with the same also having been verified by an independent audit firm.

UBL Funds currently manages eleven funds, including two capital protected funds and two pension schemes. Aggregate assets stood at Rs. 24.8b at end-March 2010, ranking the AMC as the second largest in the private sector. Overall decline in net assets of income funds has been countered with the rapid growth in money market fund, which now represents more than half of the assets under management. Unit holding pattern of the funds under management features a low retail base. While related-party holding is substantial in the case of aggressive income funds, it is low in the money market fund and recently launched income funds. UBL Funds has revised its expansion strategy for the retail market. Investment centers have been reduced and enhanced focus is placed on capitalizing the branch network of the parent bank and other distribution channels.

Performance of funds under management has exhibited varying trends. Performance of funds previously categorized in the income category continues to deteriorate over time and these funds feature significant proportion of high-risk assets. Strong redemption pressure has reduced fund sizes of United Growth & Income Fund and United Islamic Income Fund considerably, concentrating unit holding with United Bank Limited. The company has launched two new income funds, to offer a greater range of products to investors. The equity fund and Shari’ah-compliant balanced fund, on the other hand, have depicted significant improvement in performance, being ranked in the top quartile in relation to peer group over the past one year. These funds feature international investments, the performance of which has also improved following the shift in portfolio holdings. Continuation of this trend over the long-term will continue to be monitored.

The mutual fund industry currently enjoys strong institutional investor base in view of the tax advantage. Industry participants have yet to establish a strong foot hold in the retail market. Going forward, differentiation in product offering and superior customer services may enable companies to distinctly position themselves.

For further information on this rating announcement, please contact Ms. Sabeen Saleem, CFA (Ext: 510) or Ms. Sobia Maqbool, CFA (Ext: 506) at 35311861-70 or fax to 35311872.



Faheem Ahmad
President & CEO

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