PACRA Assigns Initial Stability Rating to Al Ameen Islamic Income Fund

UBL Fund Managers Limited ("UBL Funds" or the "AMC") has recently launched AL Ameen Islamic Income Fund("AAIIF" or the "Fund") on 29-May-23. The Fund is a medium-risk profile fund. It is an open-ended Shariah-compliant Income Fund to provides a competitive rate of return to its investors by investing in quality Sukuks, Shariah-compliant Government Securities, Islamic Bank Deposits, and short and long-term Shariah debt instruments. The investment policy of the Fund targets an allocation of a maximum of 75-100% in Shariah-compliant Government Securities. The Fund size of the Fund as of end Nov'23 was PKR 269mln. As of the end Nov'23, investment in Government securities (Ijara Sukuks) represented ~34.72% and 61.67% in Cash Deposits with AA-rated Banks, and ~3.60% in Others.
Given the maximum WAM (excluding the Government securities) of the Fund can go up to four years the exposure to credit risk and interest rate risk is considered on the higher side. The WAM of the Fund was 58 days at the end of Nov’23 (32 at the end of Oct '23). The Duration of the Fund stood at 55 days at the period end Nov'23 (33 at the end of Oct 23); representing medium exposure to interest rate risk. The top 10 investors' concentration of the Fund, at the period end Nov'23 was ~77.25% limiting the Fund to redemption pressure. Keeping in view the strong liquidity profile of the Fund the ability of the Fund to meet the redemptions promptly is considered strong.
So far the returns generated by the Fund are higher against the specified benchmarks.
As per the credit quality criteria for the assigned rating the Fund's asset allocation is subject to a minimum credit rating of "AA-". Going forward, any Material changes in the investment policy or the devised rating criteria for the assigned rating would have an impact on the ratings.

About the Entity
UBL Fund Managers Limited, incorporated in 2001 as a public unlisted company, is one of Pakistan's leading Asset Management and Investment Advisory companies. It is licensed by the Securities and Exchange Commission of Pakistan (SECP) to carry out these services under the Non-Banking Finance Companies Regulations. The Company is ~98% owned by United Bank Limited, while the remaining stake belongs to individuals. The Company’s Board of Directors comprises seven members including the CEO. The CEO, Mr. Yasir Qadri, has been associated with the asset management industry for over sixteen years. The board’s Chairman, Mr. Imran Sarwar, who has over 25 years of leadership, management, strategy, and risk experience in banking. He holds a business degree from Ohio Wesleyan University and Law from the University of Punjab. The Company’s diverse product slate includes 17 conventional funds and 10 Shariah-compliant funds as of the end of Nov'23 belonging to all major categories. The assets under management stood at ~PKR 168.05bln at the end of Nov'23.