Expert RA, a ranking agency, confirmed the A++ trust and service quality ranking of TKB Investment Partners Asset Manager with a stable outlook.
Expert RA ranked the Company as # 8 for total assets under management as of June 30, 2021 at the market of trust management and collective investments. The Company primarily focuses on managing pension savings of Non-State Pension Funds (66.7% of assets under management as of June 30, 2021) and on trust management of corporate funds (18.0%). These priorities have restrained the score potential for business diversification. The Asset Manager also handles pension reserves of Non-State Pension Funds, insurer funds, endowment funds, closed-end mutual funds, open-end mutual funds, interval mutual funds, and Individual Trust Management of personal funds. Having an anchor client who ensured more than half of Asset Manager’s trust management revenue between June 30, 2020 and June 30, 2021 was highlighted as the ranking booster.
The Agency has highly rated the quality of Company’s assets under management. As of June 30, 2021, the assets’ value adjusted with the Agency’s methodology correlated to the off-balance value at 0.9 for Pension Savings Portfolio, at 0.73 for insurer reserves and own funds, and at 0.79 for other funds under management. At the same time the Agency did not identify any risk of assets under management accumulation at major counterparties or related parties.
The volume of assets under management was assessed as having negative dynamic. Between June 30, 2020 and June 30, 2021, the total amount of assets under management reduced by 17.6% due to the outflow of Military Mortgage funds. The performance of portfolios managed by the Company in key business segments have not outperformed Agency’s benchmarks. The average weighted yield between June 30, 2020 and June 30, 2021 for the Pension Savings Portfolio of Non-State Pensions Funds was at 7.38% and at 12.77% for corporate funds under Individual Trust Management.
The Agency highly assessed the quality of Company’s balance sheet assets (as of June 30, 2021 the asset quality ratio was 0.84) and its liquidity status (as of June 30, 2021 the current liquidity ratio stayed at 10.9). Positively rated factors also included a high excess over the normative equity value (1099.4% as of June 30, 2021) and a high capital reserve compared to operating expenses (116.7% as of June 30, 2021).
The Company’s operative efficiency is graded as high because between June 30, 2020 and June 30, 2021 its operating expenses were covered by its asset management fees by 341.2%. At the same time the average management fees for both within and outside closed-end mutual funds were ranked low by the Agency. The Asset Manager’s business margin stays high because between June 30, 2020 and June 30, 2021 the Return on Equity calculated as net profit was at 131.3%.
The agency highly rated the investment framework, however, it pointed out a shortcoming in the lack of approved documents regulating the investment process. The identified positive factors included the efficiently organized and regulated Risk Management System, the sophisticated model used to assess issuer’s credit risks, market risks and risks to investment liquidity. The Agency also highly graded the quality of Company’s IT infrastructure. However, the rating score was restrained by the moderately detailed development strategy and Company’s complicated ownership structure.
As of June 30, 2021, TKB Investment Partners (JSC) managed 482.8 billion rubles wherein its own funds equaled to 959 million rubles (using the Bank’s of Russia calculation template). According to Expert RA, the Company’s performance during the 1st half of 2021 made it #8 for assets under management, #4 for pension savings of Non-State Pension Funds, #2 for corporate funds under Individual Trust Management, and #5 for insurers’ reserves and own funds.
Key informational sources for the ranking review were TKB Investment Partners (JSC), the Bank of Russia, and Expert RA. The data used by the Expert RA Agency during the ranking review was sufficient to apply the methodology.
Source: Rating Agency Expert (Expert RA)