The Pakistan Credit Rating Agency Limited
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Afnan Iqbal

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PACRA Upgrades Asset Manager Rating of National Investment Trust Limited

Rating Type Asset Manager
(24-May-21 )
(05-Nov-20 )
Action Upgrade Maintain
AM Rating AM1 AM2++
Outlook Stable Positive
Rating Watch - -

National Investment Trust Limited ("NITL" or the "Company") is one of the prominent and oldest AMC which reaps the benefit of being the first AMC in Pakistan. The rating upgrade takes into account the consistently better funds performance among peers, fund slate diversification, materialization of digital initiatives and a strong equity base and financial profile. The rating also takes comfort from experienced management team, structured investment decision making process, strong control environment and satisfactory governance framework. The Compliance, Risk Management and Internal Audit functions are segregated in line with the best practices to strengthen the control environment. The rating also incorporates the sizeable growth in AUM’s by~24% to ~PKR 95bln at end-Dec’20 (Jun’20: PKR 76bln). The growth momentum is expected to continue with management focusing on strengthening its digital presence and outreach which would ultimately results in better retail penetration and distribution & customer services. The market share of ~9.7% at end-Dec’20 (Jun’20: ~9.8%) is well managed despite of the economic uncertainty amid Covid-19 and industry wide growth in relative fixed income avenues. NITL's product slate is tilted towards equity category and holds ~33% share of Shariah compliant and conventional equity category at end Dec'20. On average ~80% of AUMs were concentrated in equity funds; however, the management is now focusing to manage concentration in funds which is also evident from a considerable influx in Money Market Fund. NITL is also focusing to capture market share of non-traditional investment avenues and has recently entered into arrangements with prominent entities to provide investment advisory services under SMA mandate a separate SMA team has been hired in this regard. The AMC is also expecting to launch Social Impact Fund which aims to generate specific beneficial social or environmental effects in addition to financial gains. The overall funds performance remained satisfactory where majority of the funds outperformed the industry averages and benchmark. NITL remained profitable in 1HFY21 and posted highest profits in industry and has the largest equity base at end-Dec'20. NITL's capitalization and fee generation capabilities provides cushion against market volatility.
The rating is dependent upon the Company’s ability to sustain its market share and upholding strong investment processes and control environment. Meanwhile, consistent performance of funds compared to benchmark and peers is critical. Any sustained downturn in fund performance and/or significant loss in market share may impact the rating.

About the Entity
National Investment Trust Limited was established in 1962 and is a pioneer in mutual fund industry. The Company’s Board of Directors currently comprises ten board members out of which nine are non-executive. Mr. Adnan Afridi, CEO/MD who joined in Feb'19 holds profound experience in the financial services and capital markets. Mr. Manzoor Ahmed is the COO and has a successful track record of managing the operations and investment portfolio of the Company. The Company is currently one of the largest asset management company in Pakistan with a portfolio of twelve open-end funds which includes two non-public funds namely NIT-SEF and NIT-EMOF, two voluntary pension schemes and an exchange traded fund. The assets under management of the Company stood at ~PKR 94,578mln (including SEF & EMOF) end-Dec'20.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.