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The infrastructure stability rating is was assigned to the AMC OJSC National Reserve!


20/10/2010

On October, 20h, 2010 at the press-conference in news agency ‘Interfax-Ukraine’ the RA ‘Expert Rating’ informed about awarding infrastructure stability rating with outlook uaBBB.amc according to the rating agency scale to the AMC OJSC National Reserve. The company with the given rating will with good level probability discharge its fiduciary duties to the clients, having material and technical base, personnel and resource potential relevant to this purpose.

Following the rating research, RA Expert-Rating awards to JSC AMC National Reserve (code USREOU
22904759) the rating at the level uaBBB.amc. There is high probability of that the company with the given rating will discharge its fiduciary duties to the clients, having material and technical grounds, personnel and resource potential for that. Summarizing the results of the rating research RA Expert Rating highlights the following aspects:
1. AMC National Reserve occupies a small market share: less than 1% of public ICI and NPF market, on the nonpublic fund market the share of the company varies about 2–3%. Up to 90% of net assets of funds managed by AMC National Reserve, are owned by nonpublic funds, which complicates both evaluation of management efficiency and calculation of actual market share.
2. In the AMC National Reserve most potentially dangerous situations for investors eventually entailing
conflict of interest, are solved by procedural methods: at the expense of NPF's profitability, AMC refused to interact with the trader belonging to the same Business Congress Corporation as AMC. The risk management committee is in place in AMC, where administration of the company responsible for the economic part does not have deciding vote.
AMC does not practice selling products to issuers, securities of which are purchased by the funds. However, at the time of rating some measures undertaken hasn’t been registered properly by internal documentation. Also, a part solutions eliminating the conflict of interests will be publicly announced only after publication of the rating report. That is the steps earlier aiming elimination of the conflict of interests with investors, have not been disclosed, that reduced their value. The AMC has comprehensive control system of investment managers work, which minimizes potential abuses.
3. Financial condition of AMC National Reserve has been determined by the Agency as very stable. The
company is to large extent overcapitalized, has perfect financial strength margin, and the inefficient work of recent years is not a significant factor due to small losses and development strategy change towards the NPF management, an AM sector, which cannot be profitable at the start.

4. The Agency assesses as high the assets management quality in AMC National Reserve. On the one hand AMC has not yet worked at wide market and has a limited list of investors. On the other hand, after favorable market conditions are formed, the only public fund of AMC at once showed a return by an order higher than benchmarks. To make final conclusions, it is necessary for AMC to show similar results in the open market and with greater than now number of funds.
5. Diversification of customer base of AMC National Reserve is close to satisfactory. The public fund is based on investments of five investors. Private funds, by definition, cannot be based on massive investment. The only positive point in the diversification are NPFs, despite the fact that 64% of NPF assets correspond to 5 top customers. These funds are backed by a significant number of natural persons contributors. In the future, such model will open for AMC National Reserve the possibilities to work in the broad market.
6. RA Expert Rating focuses attention on the fact that AMC National Reserve already has an adequate system of management of client assets. The agency can only state the fact that the system worked in the past and is working now. Although, it works and is adapted for a narrow segment of clients. There is some risk of that when AMC enters broad market with mass products, the operational algorithms based on small number of investors would start failing.
Currently the Agency doesn’t observe apparent problems except a need for enhanced transparency. Increased transparency of AMC and successful implementation of its operation models in the open market can become reasons for raising the infrastructural rating.

Rating report on OJSC National Reserve

Page corporate on saturday OJSC National Reserve

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