Bangkok--14 Jul--Fitch Ratings
Fitch Ratings (Thailand) Limited has affirmed Thailand-based SCB Asset Management Co., Ltd's (SCBAM) National Investment Management Quality Rating (IMQR) at 'Excellent(tha)'. The Outlook is Stable.
KEY RATING DRIVERS
SCBAM's National IMQR is driven by its robust investment process, exceptional investment resources and multi-layered risk controls. The rating also reflects the asset manager's sound investment performance, strong investment-management franchise and systematic communication with mutual, private and provident fund investors.
SCBAM has consistently implemented its medium-term objective of gravitating to multi-strategy asset-allocation funds while consolidating its leading market position in the private-fund segment. Its investment offerings demonstrate depth and breadth, with high product sophistication relative to industry peers.
SCBAM's 'Excellent(tha)' rating is based on the following category scores:
Investment process: Strong
Investment resources: Excellent
Risk management: Excellent
Investment performance: Consistent
Company and client servicing: Excellent
National IMQRs are assigned on a descriptive scale based on Fitch's assessment of the asset manager's investment capabilities and the strength of its operational platform. Asset managers are rated 'Excellent', 'Strong', 'Proficient', 'Adequate' and 'Weak', relative to the standards applied by institutional investors in the relevant national market. Asset managers in the 'Excellent' national scale category demonstrate an operational framework that Fitch considers superior relative to domestic institutional standards.
Investment Process
SCBAM's investment process is deemed robust relative to the industry. This is driven by the asset manger's documented portfolio reviews, in-depth research and disciplined buy-and-sell process that is overseen by an investment committee. There is now greater stability in the firm's equity investment process after several years of refinement.
Investment Resources
SCBAM's investment resources exhibit an exceptional degree of industry experience, functional segregation, limited key-man dependence and well-balanced portfolio manager profiles. Staffing numbers and experience are consistent with the firm's coverage, backed by clear portfolio-management responsibilities and a variety of data sources.
The asset manager's investment teams are extremely well-organised and have high levels of collective and individual investment-management experience. Past senior-level turnover has been accompanied by timely replacements. Its front and middle- to back-office systems are highly automated and integrated, with evidence of top-notch functionality, scalability and regular maintenance.
Risk Management
SCBAM's risk controls are multi-layered, evident in its integrated system controls, experienced risk managers and rigorous control processes, including frequent stress tests, counterparty reviews and regular reporting of operational, market, liquidity and credit risks. Investment risk management is strongly embedded in the asset manager's investment processes and risk analytics. SCBAM's parent, The Siam Commercial Bank Public Company Limited (AA+(tha)/Stable), governs risk policy, participates in SCBAM's risk management committee and provides its subsidiary with a robust set of risk-related resources.
Investment Performance
The firm's three-year risk-adjusted fund performance has mostly been sound relative to peers. SCBAM has mostly outperformed the industry average in fixed-income funds - the largest contributor to its assets under management (AUM) - on a risk-adjusted basis for each fund classification. The asset manager has also outperformed peers in equity funds focusing on small and mid-cap stocks, but has lagged peers in larger-stock funds that tend to be constrained by legacy investment guidelines.
Company and Client Servicing
Established in 1992, SCBAM has a sound investment-management franchise and significant footprints across a range of fund types, with THB1.3 trillion of AUM at end-April 2017. It retains a strong presence in fixed-income funds, which accounted for 76% of total AUM. The firm covers a broad range of mutual funds and has rapidly expanded its offerings in multi-strategy asset-allocation funds.
Already the largest in the market, SCBAM's private funds have also seen notable increases in AUM in recent years, accounting for about 45% of total market share in April 2017. This attests to SCBAM's strong franchise among institutional and high-net worth clients. The firm's communication to unitholders has been systematic, often exceeding regulatory and industry standards. This is evident in its detailed reports to unitholders.
RATING SENSITIVITIES
The rating is sensitive to adverse changes to any of the following five key pillars: investment process; investment resources; risk management; investment performance; and the company's performance, including client servicing. Any negative change in the score assigned to one or more pillars could lower the rating.