Press Release

JCR-VIS Reaffirms Management Quality Rating of Magnus Investment Advisors Limited
 

Karachi, March 2, 2016: JCR-VIS Credit Rating Company Ltd. (JCR-VIS) has reaffirmed the Management Quality rating of Magnus Investment Advisors Limited (Magnus) at ‘AM2- (IA)’ (AM-Two Minus (IA)) with a ‘Stable’ Outlook. The previous rating action was announced on February 26, 2015.

As the only independent investment advisor in Pakistan, the franchise of Magnus has continued to strengthen over time, as manifested in consistent growth in Assets under Management (AUMs) and number of clients. However, there is significant market competition with well-established Asset Management Companies (AMCs) present in the investment advisory space. Retaining and expanding client base and maintaining profitable operations have not been growth barriers for Magnus to date. However, the growing presence of AMCs in this industry may pose challenges for specialized investment advisory companies.

In the coming years, Magnus envisages diversifying its business model by launching uniform portfolios for corporate and individual clients. In comparison to institutional clients which have highly customized portfolios, these clients will be offered standardized portfolios based on their risk appetite. Moreover, the company has recently launched a subsidiary which will operate as a mutual funds and insurance distributor. Impact of these initiatives on profitability indicators are yet to be seen. On a timeline basis, portfolio returns of the company have outperformed their benchmarks both in terms of asset classes as well as accumulated return for entire portfolio. Consistency in performance results and level of customer services are considered important factors for client retention and sustained growth in AUMs.

The assigned rating incorporates policy framework in place, which exhibits strong disposition towards self regulation, transparency and disclosures to clients. Rating also reflects a streamlined portfolio management process with sound analytical input from security analysis to development of investment strategy and achievement of investment objectives. Moreover, quality of reporting to clients is comprehensive and standardized. Management team at Magnus has been strengthened and vacancies have been largely filled with the appointment of qualified resources. However, stability of the team is considered crucial in order to meet the organization’s long term objectives. Magnus also formulated comprehensive documentation of procedures, systems and job descriptions to ensure continuity in operations in case of turnover.

Directors of Magnus include individuals with extensive experience in different sectors. Board oversight is considered satisfactory with effectively functioning Board and management level committees. However, governance framework of the company may be improved by addressing certain reporting line inconsistencies. Moreover, composition and recording of Board level committees also depict room for improvement.

For further information on this rating announcement, please contact the undersigned (Ext: 507) or Mr. Javed Callea (Ext: 501) at 35311861-70 or fax to 35311872-3.

Mohammad Khalid Ali
Advisor

Applicable Rating Criteria: Management Quality Rating Investment Advisors
http://www.jcrvis.com.pk/Images/MQR-Mehtodology-2015.pdf

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Information herein was obtained from sources believed to be accurate and reliable; however, JCR-VIS Credit Rating Company Limited (JCR-VIS) does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. JCR-VIS, the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report. JCR-VIS is not an NRSRO and its credit ratings are not NRSRO credit ratings. JCR-VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2016 JCR-VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to JCR-VIS.

JCR-VIS Credit Rating Company Limited