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The Pakistan Credit Rating Agency Limited
Press Release

Date
01-Apr-22

Analyst
Muhammad Zain Ayaz
zain.ayaz@pacra.com
+92-42-35869504
www.pacra.com

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This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA Maintains Stability Rating of UBL Cash Fund

Rating Type Stability Rating
Current
(01-Apr-22 )
Previous
(02-Oct-21 )
Action Maintain Maintain
Long Term AA+(f) AA+(f)
Short Term - -
Outlook Stable Stable
Rating Watch - -

The rating reflects the strength of the Fund's credit and interest rate risk profile. The Fund's very low risk profile emanates primarily from its investment policy of maintaining a size-able proportion of placements with commercial banks having 'AAA' rating. At end Dec'21, ~82% of the funds' assets were allocated as cash placements with 'AAA' rated Banks, of which ~75% is concentrated in a single bank, giving rise to concentration risk. ~18% are allocated as cash placement in banks having rating 'AA' and above. The offering document of the fund allows it to invest in banks rated 'AA' and above. The Fund limits its quarterly average duration below 45 day. At end Dec'21, the duration of the Fund is 7 days, limiting the exposure to interest rate volatility, and bodes well for the rating. Fund's unit holding pattern is highly concentrated with top 10 investors representing ~77% of the net assets, resulting in high redemption pressure on the Fund.
Going forward, the fund intends to maintain its asset allocation towards higher rated banks and may take exposure in short-term government securities in order to gain benefit from yield curve movements. Material changes in the planned asset allocation strategy, impacting its credit quality and/or exposure to interest rate risk, would affect the rating.

About the Entity
UBL Fund Managers Limited, incorporated in 2001 as a public unlisted company, is one of the leading Asset Management and Investment Advisory company in Pakistan. 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, is associated with the asset management industry for more than sixteen years. The board’s Chairman, Mr. Azhar Hamid, is a banker having more than four decades of banking experience. The Company’s diverse product slate includes 14 conventional funds and 10 shariah compliant funds as at end Dec’21 belonging to all major categories. The Company is also offering two voluntary pension schemes in the conventional and shariah compliant category. The assets under management stood at ~PKR 116bln at end Dec’21.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.