INTERVIEW: MIR MOHAMMAD ALI, CEO - UBL FUND MANAGERS
STABILITY OF THE CAPITAL MARKET IS VITAL FOR MUTUAL FUNDS
MUTUAL FUND-SOURCE OF MONEY SUPPLY FOR PROJECT FINANCING & LONG TERM INVESTMENT
July 14 - 20, 2008
Mir Muhammad Ali, CFA, CEO UBL Fund Managers, while describing the role of the capital market critical for economic stability, has underlined the significance of the mutual fund industry as a long term source for investment.
Mir Mohammad Ali has extensive experience of 15 years in investment banking and fund management. Prior to joining UBL Fund Managers he was associated with Asian Development Bank (ADB). He represented ADB on the board of several companies including an asset management company.
Mir Mohammad Ali also worked as Divisional Head Investment Banking of United Bank Limited. Mir was instrumental in setting up of the Investment Banking Group (IBG) at UBL which obtained the best investment bank award for the year 2002-2003 from the CFA Association of Pakistan.
Apart from his engagements in a large number of debt and capital market transactions, Mir's achievements include: setting up of UBL Fund Managers in 2002, which was the first AMC to be set up by any commercial bank in Pakistan - this in turn enabled the launching of the first true money market fund in Pakistan; UMF, execution of Pakistan's first listed asset backed securitization transaction.
During his distinguished professional career, he enjoyed senior positions in various institutions including Pakistan Kuwait Investment Company, IBM World Trade Corporation and ANZ Grindlays Bank.
Mir Mohammad Ali assumed the charge of UBL Funds as its CEO in July 2005 with a company size of Rs 3 billion which has now grown to Rs 33 billion in just two and a half years making it one of the largest asset management companies in Pakistan.
Mir is MSc in Finance from University of Strathclyde in Glasgow, Scotland. He was awarded the prestigious Chevening Scholarship from the British Council for his MSc. He is an MBA from the Institute of Business Administration (IBA) with a Gold Medal for an overall first position in 1988-89. He is also a CFA charter holder.
Mir Muhammad Ali actively participates as director on the board of directors of Mutual Funds Association of Pakistan (MUFAP) as well as CFA Association of Pakistan (CFAAP).
Discussing the state of the economy in Pakistan he observed that currently the economy is passing through stresses besides facing the global shocks especially the international oil prices and phenomenal food inflation.
Actually, the economy witnessed a boom like situation during past six seven years when growth was impressive and liquidity due to foreign investment was good. But now the global scenario has changed the complexion of our economy because of persistent high inflation levels, commodity prices. Besides high oil prices have led to economic depression.
The economies heavily dependent on imports experience natural impact of high price phenomenon. Pakistan too is not an exception as it has to rely on imports. Consequently, the inflationary pressure has mounted to new high. Inflationary pressures always disturb the economic growth unless you have enough strength to produce goods and services to counter the inflationary pressures.
He pointed that we are not producing enough goods and services that is a gray area and a cause of concern. On the other hand, increased borrowing of the government from the banking sector is also fueling the inflation that led to economic crisis and that also brought the exchange rate under pressure.
Resultantly the KSE-100 Index level downs by 20 percent. Since the economic crisis surfaced in Pakistan, the interest rates have also gone up. Mir was of the view that in the current scenario we are lagging behind in economic management.
Actually when the economy faces challenges, imbalances and challenges the question arises who will put things in order. First of all the government should have a competent and professional finance minister to deal with the situation professionally and not emotionally or politically. He should know and can evaluate the economic issues without coming into influence of political pulls while addressing the economic issues. Naturally, the economic ills should be handled and cured by the economists, he strongly recommended. He would first fix the priorities of the economy. He will be required to identify the areas which require immediate improvement under the prevailing global scenario. It is also necessary to evaluate the economic areas having potential to survive and grow in the persisting depression. Such a job can be delivered only by a technocrat and the professional economists and not by the politicians. The performance of the players like capital markets is strictly related to the economic performance of the country. Economic growth directly supplements the performance of capital market. Since the mutual fund industry is the integral part of the capital market it also thrives simultaneously on the growth of the capital market.
As far as the role of the mutual funds and savings of the country are concerned, mutual funds have a critical role to play in the economic stability. As the country has to grow, major and large projects have to come up which would require a reliable and strong source of money supply on long term basis for investment. It is the mutual fund which can do the job because it is the kind of source which collects money from common man and channelise it productively in the main stream of the economy. To invigorate and strengthen this critical source of money supply, the growth of capital is imperative for stability of the mutual fund industry because weakening of the capital market shakes the confidence of the investors and the common man. As the mutual funds have to invest in the capital market, hence a stable and strong capital market is of vital importance for strengthening the economic cycle in any economy, Mir Mohammad Ali remarked.
PERFORMANCE OF UBL FUND
UBL Fund Managers Ltd. is a wholly owned subsidiary of United Bank Limited, making it the first Asset Management Company to be launched by a bank in Pakistan. UBL Fund Managers have been operating since the year 2002 and are currently ranked No. 1 in Assets under Management (AUM) in private sector open-end mutual funds (out of 32 existing companies). UBL Fund Managers has been awarded a Management Quality Rating of AM2- by JCR-VIS Credit Rating Agency.
The financial performance of the UBL Fund Managers was significantly reflected in the total payout of Rs. 2,447.57 million for the year ended June 30, 2008 (including interim payout during the year) - for all its open end funds. This distribution translates to 100% of the total distributable income of each fund for the mentioned period.
On the fixed income side, the Board has approved a distribution of Rs. 3.0281 per unit for United Money Market Fund (UMF) and Rs. 2.9794 per unit for United Growth & Income Fund (UGIF). This is in addition to the interim dividend of Rs. 6.1083 per unit (for UMF) and Rs. 6.1988 per unit (for UGIF) declared in April 2008.
Despite recent volatility in the market, the United Stock Advantage Fund (USF) has announced a distribution of Rs. 3.01 per unit (3.01 units for every 100 units) for the year 2007-2008. As compared to its benchmark the KSE-100 Index, USF has managed to outperform the index by 6.66%.
The Shariah compliant funds managed by UBL Fund Managers also performed reasonably well during the period. The Board has announced healthy distributions of Rs. 5.14 per unit (5.13 units for every 100 units) for UCIF and Rs. 2.41 (2.40 units for every 100 units) for UIIF. The Company has already distributed Rs. 3.44 per unit in case of UIIF in April 2008.
UBL Fund Managers is currently managing assets of over Rs. 28 billion on behalf of investors across the nation and in UAE. In addition to the launch of United Islamic Income Fund (UIIF), the company launched its first capital protected fund - UBL Capital Protected Fund (UCPF-I)-in March 2008 exclusively through the UBL distribution network. Keeping true to its commitment to investors, UBL Fund Managers continuously strives to deliver a value-added and innovative suit of products to investors. The company recently announced the launch of a first of its kind investment product to be launched in Pakistan, UBL Principal Protected Plan (UPPP) - a unique investment opportunity that offers up to 100% equity returns, while protecting the principal, if held till maturity. UPPP-I subscription was on July 10, 2008.