Karachi, December 27, 2021 (PPI-OT):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 31, 2020.

The assigned rating incorporates AMIML’s dominant market positioning in the asset management industry, being one of the largest AMC in the country. In comparison to overall AUM’s (Asset Under Management) of the mutual fund industry, AMIML’s market share declined to 18% (FY20: 20.5%) in FY21 due to overall market uncertainty and shift of clientele towards higher rates offered by conventional schemes. Furthermore, market share further fell to 15.6% at end-Oct’21 owing to AUM reduction noted in the largest contributing fund.

Overall AUM mix is dominated with income and money market funds although since last review a tilt towards equity funds was registered driven by improved performance of the equity market in the outgoing year. Going forward, AUM mix is expected to witness some shift towards fixed income funds over the rating horizon. Portfolio of Separately Managed Accounts (SMAs) also registered a sizeable increase in FY21.

Assigned ratings incorporate sizeable retail client base providing competitive advantage; although high concentration in retail AUMs continues to be a risk. Corporate segment continued to be the growth driver in the outgoing year, as liquidity in the corporate segment witnessed growth. Ratings remain dependent on further strengthening of sales team and ADCs, expansion of geographic footprint and enhancement of retail customer base through digital initiatives. 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 and Board Committees being in place and their compositions being aligned with best practices. Overall fund performance remained satisfactory.

Assessment of financial risk profile in FY21 incorporates improving income from core operations and support of other income including realized and unrealized gain on sale and revaluation of investments and investment income in overall profitability of the company. Higher management fees was as a result of a gradual tilt in fund concentration towards higher management fee based equity funds along with increase in management fees. Leverage free balance sheet supports assessment of financial profile. The assigned rating remains dependent on maintenance of market position and AUM profile while fund concentration in the total AUM base leaves room for improvement.

For more information, contact:
Director Compliance and Rating Analytics,
VIS Credit Rating Company Limited
VIS House, 128/C, 25th Lane off Khayaban-e-Ittehad,
Phase VII, DHA, Karachi, Pakistan
Tel: +92-21-35311861-72
Fax: +92-21-35311873
Email: bilal@jcrvis.com.pk
Website: https://www.vis.com.pk/