The rating applies to SCBAM's Bangkok-based asset management activities.
SCBAM managing director Chotika Sawananon said the rating reflects the company's low vulnerability to operational and investment management failure.
The rating is based on many aspects - from personnel to its ability to control risks, fund management, to its efficient use of technology - she said.
Fitch Ratings said the rating is based on SCBAM's sound track record, strong market position and leading role in the asset management industry. It is underpinned by strong support from SCBAM's single shareholder - Siam Commercial Bank (SCB, 'AA(tha)'/Stable/'F1+(tha)') - the fourth-largest bank in the country.
SCBAM benefits from SCB's strong franchise and distribution capacity as most of its assets under management are distributed through the bank's branch network.
SCBAM's largest fixed-income fund is supported by a fund-specific liquidity facility provided by SCB in case of market stress.
The rating reflects experienced senior management and investment staff, as well as increasing operational efficiency arising from regrouping investment management functions. Nonetheless, the tenure of staff at SCBAM is relatively short while staff turnover was relatively high over the past two years. In 2009, SCBAM transferred certain functions, including risk management, audit and compliance, as well as IT to SCB. The transfer has enhanced the quality and robustness of those functions, given the bank's extensive resources and stringent policies.
Fitch also noted the emphasis on operational risks with a newly implemented tool to support self-assessment of risks. The agency also recognises SCBAM's pre- and post-trade compliance even though its pre-trade checks are not yet fully automated.
SCBAM's portfolio management processes are fundamentally oriented, using a blended top-down/bottom-up investment approach, Fitch said. Its investment process for fixed-income securities has been rather stable while the equity investment process has been subject to changes over the past two years. Fitch believes the latter needs to further extend its research coverage.
The agency also notes a positive contribution from the asset allocation department set up in 2009 to allow a deeper segregation of responsibilities within the investment management team.
SBCAM's investment administration has seen improving automation in trade lifecycle management and maintains proactive and regular communication with clients, Fitch said.
However, SCBAM's reporting of content make limited disclosures, as clients generally do not demand in-depth analysis, Fitch said. Nevertheless, it is in compliance with regulations and in line with local peers.
Reports on performance attribution and key risk indicators are mainly for internal use.
Fitch said it recognises the improvements in technology, following the transfer of the IT function to SCB. The level of automation at SCBAM's portfolio holdings, fund accounting and NAV calculation and its ability to handle more complex assets has notably increased following the first leg of IT upgrade, Fitch said. It expects full implementation in the next quarter.
SCBAM plans to improve further the technology it uses for portfolio analysis, trading processes, compliance and performance attribution next year.
The key challenges for SCBAM are expanding into higher-margin products amid intense competition, increasing non-group related revenue sources to reduce dependency on SCB in the long term and establishing a longer track record in asset allocation.
SCBAM invests mainly in the domestic market and covers all asset classes with about 70 per cent of assets under management concentrated in fixed-income and money market products.
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