Press Release

VIS Reaffirms Management Quality Rating of Al Meezan Investment Management Limited

Karachi, December 30, 2022: VIS Credit Rating Company Ltd. (VIS) has reaffirmed the Management Quality Rating of Al Meezan Investment Management Limited (AMIML) at ‘AM1’ (AM-One). ‘AM1’ rating denotes excellent management characteristics exhibited by the asset manager. Outlook on the assigned rating remained same at ‘Stable’. Previous rating action was announced on December 27, 2021.

The assigned rating incorporates AMIML’s dominant market positioning in the asset management industry. The AMC has continued to maintain its dominant market position as the largest AMC in the industry. Overall AUM mix since last review has tilted towards Islamic income and money market funds while proportion of equity funds in Assets under Management (AUMs) has declined mainly on account of adverse equity market returns. Concentration in top 3 funds in total AUMs of the AMC is considered on the higher side with the same comprising 66.5% of AUMs at end-Oct’22 (Jun’22: 65.3%).

Retail AUMs in relation to total AUMs increased hence client concentration has trended down. Fund performance has improved as of Jun’22 with 7 off 31 funds (representing 40.8% of AUMs) posted return rankings in the first quartile. Though in absolute terms, AUMs in first quartile has fallen to 41.7% in Oct’22 (Jun’22: 51.3%; Jun’21: 67.5%). The rating takes into account the presence of a formalized and documented investment process with sound investment research infrastructure. Corporate Governance framework in place is considered adequate, with Board & Board Committees being in place and their compositions being aligned with best practices.

Revenue base contracted during FY22, due to the shift in AUM mix from equity to income funds and money market funds, as the latter features lower management fees. Given weakening of revenue base, efficiency ratio has increased, albeit the same compares favorably to peers. Overall financial risk profile is viewed as conservative, given that the balance sheet remains debt-free. The assigned rating remains dependent on maintenance of market position and AUM profile, as well as improvement in relative fund performance.
For further information on this rating announcement, please contact Mr. Arsal Ayub, CFA (Ext: 215) or the undersigned (Ext: 306) at (021) 35311861-66 or email at info@vis.com.pk.


Sara Ahmed
Director

Applicable Rating Criteria: Asset Management Companies (June 2019)
https://docs.vis.com.pk/docs/AMC-Methodology-201906.pdf

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