Press Release

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

Karachi, April 3, 2013: 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’.

In line with other market participants, investment strategies of money market and income funds managed by UBL Funds have largely been skewed towards government securities in the recent years, as risk-adjusted yields on government paper were fairly competitive. Largest fund under management is a money market fund, UBL Liquidity Plus Fund (ULPF), the same represents more than half of the AMC’s assets under management of around Rs. 36b. Income mandates form the second-biggest asset class managed by the AMC; followed by pure equity funds. In 2012, investment categories of two Islamic funds managed by the AMC were revised and the funds were rebranded. With limited product differentiation across industry players, fund management skills of industry participants will be comprehensively put to test as and when new fund types are launched. Introduction of CPPI based structure, recent launch of commodity fund (gold) and IPO of financial sector bond fund by UBL Funds is considered positively in terms of product diversification. The ability of the AMC to manage these investment mandates will be tested over time.

Year to date peer group performance rankings of money market, income (including government securities category) and equity funds under management have witnessed pressure. Since inception (August 2006) return of United Stock Advantage Fund is higher relative to benchmark. In CY12, the fund has outperformed the benchmark, albeit with a narrower margin. There has been improvement in aggressive income funds’ performance in the peer group and quantum of high risk assets has reduced considerably. Stability in investment by United Bank Limited in the aggressive income funds has provided the liquidity cushion to meet redemption pressure in a period where returns of the funds were volatile. JCR-VIS will continue to closely track the performance of funds under management and negative trends in the same may exert pressure on the assigned rating.

UBL Funds was the fourth-largest AMC in terms of its market share (adjusted for investments by associates) in open-end collective investment schemes, which was slightly higher at 11.7% (FY11: 11.3%) as at end-Jun’12. Share of retail investors in AUMs of collective investment schemes was around 16% at end-Jun’12; moreover, concentration in investor profile in some funds persists on the higher side. Product suite of UBL Funds comprises eleven collective investment schemes, two voluntary pension schemes, administrative plans and separately managed accounts.

There has been some turnover in the management team; though, resources to fill those positions have been identified and some vacancies have been filled either through external hiring or internal placement. With the implementation of four core modules, first phase of IT system revamp has been completed; the new system is expected to enhance controls and facilitate improved management reporting.

For further information on this rating announcement, please contact Mr. Javed Callea (Ext: 501) or Ms. Sobia Maqbool, CFA (Ext: 604) at 35311861-70 or fax to 35311872.



Jamal Abbas Zaidi
Deputy CEO

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