JM Capital appoints ABN-Amro Bank as independent assessors

Our Markets Bureau

Mumbai, Aug 14: JM Capital Management Private Ltd has appointed ABN-Amro Bank as independent assessors of the AMC’s 11 schemes managing a total of around Rs 1,100 crore of investors funds, majority of which are managed under its debt schemes.

ABN Amro would conduct an overall ‘fund accounting’ service that would help improve JM Capital Management’s image in the minds of almost all segments of investors, particularly high networth individuals.

Interestingly, JM Capital becomes the fourth AMC to appoint independent assessors for all its schemes, the other three includes SBI Mutual Fund, LIC Mutual Fund and Sun F&C Mutual Fund.

What’s more, JM Capital Management’s Income Fund (with corpus of around Rs 540 cr) has been assigned the AAAf rating by Crisil, making it the second pure debt fund (first income fund) in the country to receive the rating. The first being Chola Triple Ace.

According to JM Capital Management’s chief executive officer (CEO) Vijayan Krishnamurthy, “Through this arrangement with ABN Amro we intend to have an independent valuations of the JM portfolio and hence its NAV. We believe that in the current troubled times, when, due to a variety of reasons, the credibility of every avenue of investment is in question, the only way to ensure investor confidence is to have total transparency and professionalism in operations.”

The actual process of assessment of funds under JM Capital Management would begin shortly, Mr Krishnamuthy said. Further, the fund has also engaged chartered accountancy firm MP Chitale & Co to co-ordinate this process of independent evaluation of its activities by ABN-Amro Bank, and ensure that the lines of accountability and responsibility are clearly drawn and the MF follows the best international standards in operations and compliance.

The AAAf rating is also another step taken by the mutual fund to increase comfort with their fund. By being assigned the AAAf rating by Crisil, the scheme also becomes the first general income fund to be rated AAA on the basis of the weighted average credit quality of the portfolio with investment in securities rated below AAA. Chola Triple Ace, an income fund, to get a AAA rating earlier, was launched specifically as an AAA rated fund.

Generally, it is through two ways that an income fund gets assigned AAA rating. Firstly, by simply investing only in AAA rated paper and the second is the weighted average method.

Speaking at the occasion, Mr Krishnamurthy said, “The crucial thing is that for the weighted average method to work, a fund manager should have the ability to pick up high quality AA paper and possible rating upgrade opportunities. If a good fund manager does that, not only does he get better returns but he also does not comprise on quality of investments. This AAAf rating received by us is therefore, a major responsibility on the mutual fund, which has to be exceptionally vigilant and skillful in managing the fund.”

The JM Income fund has also won Crisil CPR-I ranking (Composite Performance Ranking) for risk-adjusted returns for the previous three consecutive quarters.

According to Mr Vijayan, the mutual fund has taken a number of such measures to reaffirm their commitment in maintaining a
high degree of safety and transparency while providing good returns.