Bangkok--23 Jul--Fitch Ratings (Thailand)
KEY RATING DRIVERS
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 assesses as superior relative to domestic institutional standards.
Investment Process
Fitch Ratings believes SCB Asset Management Co., Ltd (SCBAM) has a sound investment process for its broad range of funds. The investment team conducts in-depth fundamental research, and executes investment decisions through a formal process. The asset manager also has a well-documented process for reviewing its portfolio performance. Quantitative tools, overlaid with qualitative factors, support SCBAM's investment objectives and decision-making. Its portfolio managers have over the past year applied machine-learning technology more widely, extending its use from domestic to foreign equity funds.
Investment Resources
SCBAM's investment teams demonstrate breadth and depth of industry experience. Portfolio managers possess diverse relevant profiles that closely align with responsibilities in each asset class. Most key senior investment professionals have a long record with the firm. Key personnel risks appear limited, with senior staff turnover largely in line with historical rates. The firm separates responsibilities and roles by organising teams in asset classes.
Front-office systems are automated and integrated, showing evidence of regular maintenance and flexibility of functionality and scalability. The investment division has access to multiple data sources. Fitch assesses SCBAM's technological and human resources to be consistent with the requirements of its investment processes.
Risk Management
SCBAM's parent, The Siam Commercial Bank Public Company Limited (SCB, AA+(tha)/Stable), sets the group's risk policy, but has decentralised risk functions for its non-bank subsidiaries since early 2019. This has provided SCBAM greater flexibility in managing credit, operational, liquidity and market risks, while reporting lines have changed slightly from prior years. SCBAM's risk-management department is independent from its investment staff, but works closely with the latter to ensure an integrated approach to risk controls. The risk team uses internationally recognised systems for risk monitoring and stress testing.
Investment Performance
The firm has performed soundly on a risk-adjusted basis relative to peers. SCBAM's debt funds - the largest portion of its assets under management (AUM) - have performed satisfactorily relative to similar peer funds. SCBAM's performance in equity and asset-allocation funds has also been broadly in line with those of its peers.
Company and Client Servicing
SCBAM was established in 1992 and has a long-standing asset-management franchise in Thailand, with significant footprints across a range of fund types. Its combined AUM for mutual, private and provident funds totalled THB1.6 trillion at end-May 2019. The firm is increasingly offering asset-allocation funds to strengthen its mutual-fund franchise, although fixed-income funds continue to represent over 70% of total AUM.
SCBAM is a well-established asset manager in private funds, commanding well over 40% of the total industry's AUM. This reflects its franchise among institutional and high-net-worth clients. SCBAM's detailed reports to unitholders for mutual, private and provident funds meet regulatory and industry reporting standards.
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.
Contact:
Primary Analyst
Jackerin Jeeradit
Associate Director
+66 2108 0163
Fitch Ratings (Thailand) Limited
Level 17, Park Ventures
57 Wireless Road, Patumwan
Bangkok 10330
Secondary Analyst
Lertchai Kochareonrattanakul
Senior Director
+66 2108 0158
Committee Chairperson
Alastair Sewell, CFA
Senior Director
+44 203 530 1147
Disclosure: TISCO Asset Management Company Limited and Kasikorn Asset Management Limited each have a 10% equity stake in Fitch Ratings (Thailand) Limited. No shareholder, other than Fitch Ratings, is involved in the day-to-day rating operations of, or credit reviews undertaken by, Fitch Ratings (Thailand) Limited.
Note to Editors: Fitch assigns national scale IMQRs to asset management companies operating in countries where, for some rating factors, a comparison with international standards may not be applicable. In such instances, those factors are evaluated relative to local market standards of institutional investors. National IMQRs, which display a special identifier for the country concerned, for example, 'Excellent(tha)' for Thailand, are comparable with only national IMQRs assigned in the same country. The ratings are issued on a five-point descriptive scale of 'Excellent(tha)' to 'Weak(tha)'.
The sources of information used to assess this rating were SCBAM and information in the public domain.
Additional information is available on www.fitchratings.com
Applicable Criteria
Investment Management Quality Ratings (Assessing Active, Passive & Alternative Investment Managers, Strategies & Funds) (pub. 06 Mar 2017)
National Scale Ratings Criteria (pub. 18 Jul 2018)