The Pakistan Credit Rating Agency Limited
08-Mar-24
Analyst
Madiha Sohail
madiha.sohail@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
Related Research
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PACRA Maintains Stability Rating of Pakistan Income Enhancement Fund
| Rating Type | Stability Rating | |
|
Current (08-Mar-24 ) |
Previous (08-Sep-23 ) |
|
| Action | Maintain | Maintain |
| Long Term | A+(f) | A+(f) |
| Short Term | - | - |
| Outlook | Stable | Stable |
| Rating Watch | - | - |
Pakistan Income Enhancement Fund (or the "Fund") reflects the Fund's medium-risk profile. The investment objective of the Fund is to deliver a return from an aggressive investment strategy in the debt and fixed-income market. The credit quality of the Fund was ~88.6% in Govt Sec./AAA, ~8.4% in double AA+, ~0.2% in double AA, ~0.3% in AA-. At the end of Dec’23, the Fund had allocated ~47.6% in T-Bills. Whereas ~10.6% in GoP Ijara Sukuk, ~9% was invested in Banks, ~29.6% in PIBs, ~0.7% in TFCs/Sukuks whereas remaining was invested in Others. The AUMs of the Fund stood at PKR 7,572mln at the end of Dec’23. Since the investment is in Govt. securities, the WAM of Fund stood at 1022 days, exposing the Fund to credit risk. The increase in WAM is mainly due to long term investment in Government Securities. The duration of the fund stood at 262 at end of Dec'23, exposing the fund to interest rate risk. The top 10 investor concentration stood at 48.66% at end of Dec'23, keeping the redemption pressure low.
Going forward, the Fund may alter its allocation with banks and take a diversified exposure in term deposits and spread transactions keeping in view the market expectations. Material changes in the Fund's asset allocation strategy, impacting its credit quality and/or exposure to interest rate risk, would affect the rating.
About
the Entity
MCB Investment Management Limited (MCBIM or the "Company") is a Public Listed Company, regulated by the SECP. MCBIM holds licenses for Asset Management, Investment Advisory, and Pension Fund Management. MCBIM caters to both conventional and Shariah-compliant clientele and is currently managing a diverse product slate of nineteen open-end funds and four voluntary pension schemes. MCBIM is also managing one of the largest AUMs under the SMA segment and holds a significant position in the investment advisory domain.
The major shareholders of MCBIM are MCB Bank Limited ~81.42%, and Adamjee Insurance Company Limited ~7.59%. The general public holds the remaining ~11% of the shares. Mr. Khawaja Khalil Shah is the CEO of the company. There are four non-executive directors, three directors are independent and one CEO. The AUMs of MCBIM stood at PKR 164bln at end-Dec'23.