JCR-VIS upgrades Management Quality Rating of ABL Asset Management Limited to AM2

Karachi: JCR-VIS Credit Rating Company Limited has upgraded the Management Quality Rating of ABL Asset Management Limited (ABL AMC) from ‘AM3+’ (AM Three Plus) to ‘AM Two Minus’ (AM2-). Outlook on the assigned rating is ‘Stable’.

The rating upgrade takes into account the superior performance posted by funds managed by the company. ABL AMC’s fund family includes two money market funds, an income fund and a stock fund. Performance of the stock and income funds has remained competitive, with the stock fund featuring amongst the top performing funds in the open-end stock category over the past two years.

Returns of ABL Income fund were compromised to some extent in FY11 on account of lack of investment in term finance certificates. Returns generated by ABL Cash Fund and ABL Islamic Cash Fund ranked in the top quartile in relation to peer group during FY11.

In terms of Assets under Management (AUMs), the company has posted strong growth vis-a-vis industry peers, with aggregate AUMs standing at Rs. 17b at end-June 2011. With support derived from the strong franchise and widespread branch network of the parent bank, the number of retail investors has increased over time. There is, however, room for further improvement as unit holding pattern features significant concentration.

The management team of ABL AMC comprises qualified personnel. Noteworthy changes were made on the management side, including strengthening of the research function and set-up of an independent risk management function. Whilst equity research is thorough, research capabilities on the fixed income front need improvement.

Policy documentation in the area of risk management has also been undertaken. There is, however, need for greater depth in this area. Given the recent expansion into investment advisory business, the company may consider developing formal policies and procedures, along with a structured feedback process for greater transparency and disclosures to clients.

Going forward, the company plans to increase its market presence through further diversification in product offering, with primary focus on retail investors. Launch of a capital protected fund and investment plans are on the anvil.

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