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JCR-VIS assigns Positive Outlook to Management Quality Rating of KASB Funds Limited

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by March 6, 2013 General

Karachi, March 06, 2013 (PPI-OT): JCR-VIS Credit Rating Company Limited (JCR-VIS) has maintained the Management Quality Rating of KASB Funds Limited (KFL) at ‘AM3’ (AM-Three). Outlook on the assigned rating has been revised from ‘Stable’ to ‘Positive’.

The decision takes into account successful completion of the new management’s strategy for consolidation of funds under management that have reduced to 5 by Dec’12 compared to 9 funds at the time of merger, with one fund being wound up, one maturing and two equity funds and two income funds being merged into one equity fund and one aggressive income fund, respectively. Resultantly, redundancy in operations has reduced.

Performance of the aggressive income fund (KIOF) improved significantly since last review on the back of provisioning reversals against some previously non-performing exposures; performance of the asset allocation fund (KAAF) also improved, particularly during HY13.

Performance of the Islamic Aggressive Income Fund (KIIOF) depicted improvement in 1HY13 as it benefited from gain on revaluation of Sukuks. While year-to-date returns of Crosby Dragon Fund and KASB Cash Fund are weak vis-a-vis peers, the more recent performance metrics, over the last 3 months, depict a more favourable position.

Performance of funds will continue to be tracked for ability of the management to consistently deliver competitive returns in line with the mandates of the funds under management. Moreover, efforts for improvement in controls like revision of policies and manuals have also been noted.

The management has also communicated plans regarding the strengthening of risk and research functions and further developments in this regard along with steps taken to bring about depth in senior management team will continue to be monitored.

Meanwhile, cost rationalization measures taken since last review have allowed KFL to contain losses in recent periods.

Although there was an increase in overall AUMs during FY12, market share of KFL remains minimal at under 1%.

Major proportion of AUMs are in the money market fund (KCF), distribution of which through branches of KASB Bank Limited has commenced in July’12; subsequently, distribution of KIIOF via this channel has also been initiated while going forward, KFL also plans to distribute the aggressive income and asset allocation funds via KASB Bank Limited.

The management has also started tapping other sales channels for growth in AUMs and impact of these steps on market share; proportion of retail investors and investor concentration will be tracked over time.

Furthermore, the management intends to utilize its expertise in managing distressed assets to offer high return and high risk profile products to high net worth individuals. Of the existing funds, KIOF and KAAF will be managed on these lines.

For further information on this rating announcement, please contact Mr. Javed Callea (Ext: 501) or Ms. Sobia Maqbool, CFA (Ext: 604) at 35311861-3 or fax to 35311872.

For more information, contact:
Mr. Javed Callea
Advisor
JCR-VIS Credit Rating Company Limited
Tel: +9221 35311861 (10 lines) (Ext: 501)
Fax: +9221 35311872-3
E mail: javed.callea@jcrvis.com.pk

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