PACRA Assigns Initial Stability Rating to Alfalah Islamic Money Market Fund

Alfalah Asset Management Limited (Formerly: Alfalah GHP Investment Management Limited) has launched the Alfalah Islamic Money Market Fund (or "AIMMF") dated April 14, 2023 to make its portfolio more diverse and meaningful for its investors. Alfalah Islamic Money Market Fund (or the 'Fund') is a low-risk profile Fund. The Fund's investment objective is to generate regular and stable returns by investing primarily in Shariah-compliant banks and windows of conventional Banks and any other Shariah-compliant money market instruments. The fund has been launched to cater the dividend needs of the investors who are more interested in annual dividend income rather than on a daily basis. The rating reflects the strong strength of the Alfalah Islamic Money Market Fund's (or the "Fund") low credit and interest rate risk profile. The Fund's good credit quality and sound liquidity profile emanate primarily from its mandate to invest in bank deposits. As per the investment policy, the weighted average maturity of the Fund shall not exceed 90 days, and the time to maturity of any individual asset is capped at six months. As of Oct'23, ~98.7% of cash deposits in AA and above-rated avenues. The WAM of the fund stood at 38 days as of Oct'23; limiting the exposure to credit risk. The duration of the Fund remained 37 days, at the end of Oct'23, hence limiting the exposure to interest rate risk. The Fund unit holding pattern is high concentrated with top 10 investors representing ~61.7% of the net assets, which exposes the fund to redemption pressure, however related party exposure would give comfort.
Going forward, any material changes in the funds asset allocation strategy, impacting its credit quality and/or exposure to interest rate risk, would affect the rating. While compliance with the rating criteria for the assigned rating would remain imperative.

About the Entity
Alfalah Asset Management Limited (Formerly: Alfalah GHP Investment Management Limited) was incorporated on October 18, 2004 as an unlisted public limited company and is licensed by the Securities and Exchange Commission of Pakistan to manage open-ended mutual funds and offer investment advisory services. The Company was established as joint venture Non-Banking Finance Company by Bank Alfalah Limited and GHP Arbitrium. The Company provides a wide range of mutual funds and pension funds both in conventional and Shariah compliant category. The Company also provides investment advisory services to HNW individuals and corporate clients.
The Company’s board of directors comprises eight members including the Chairman and the Chief Executive Officer. The board is dominated by representatives of MAB Investments and Bank Alfalah Limited. The board has two independent and five non-executive directors. The board members possess strong profile and skills suited to the financial services industry. Assets under management of the Company stood at ~PKR 133.8bln at end Oct'23.