Analyst
Muhammad Usman
muhammad.usman@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
Related Research
PACRA Maintains Stability Rating of Pakistan Income Fund
Rating Type | Stability Rating | |
Current (30-Jun-18 ) |
Previous (12-Jul-17 ) |
|
Action | Maintain | Maintain |
Long Term | A+(f) | A+(f) |
Short Term | - | - |
Outlook | Stable | Stable |
Rating Watch | - | - |
The fund's investment objective is to earn a reasonable rate of return by primarily investing in debt and fixed income securities without taking excessive risk.
The rating reflects good credit quality and liquidity profile of the fund emanating from its 48.6% as cash placements with banks rated 'AA+' (34.08%), 'AAA' (5.93%) and 'A-' (6.85%) at end-Dec-17, while fund's exposure in PIBs was (0.5%). Meanwhile, there was a high exposure towards debt securities, primarily TFCs/Sukuks (27%). This highlights the fund's appetite for risk though currently these TFCs are mostly of good quality (A+ and above). The unit holding pattern of the fund is adequately diversified with top10 investors representing 42% of the fund's assets.
Going forward, the fund intends to maintain exposure to government securities, corporate debt securities, spreads, MTS and cash balances. The rating is contingent upon the fund's interest rate sensitivity and volatility in prices of TFCs in case of exposure to low rated instruments. Material changes in the fund's asset allocation strategy, which could negatively impact the fund's credit quality and exposure to interest rate risk, remain critical for the rating.
About
the Entity
MCB Arif Habib Savings & Investments Limited (MCBAH) incorporated in August 2000 and listed on the Karachi Stock Exchange, is a major player in the mutual fund industry of Pakistan. During Jun11, MCB Asset Management Company was merged into Arif Habib Investments. The objective was to achieve synergies in the asset management business and access a wider distribution network.
Company’s eight members BoD, two representatives from MCB, two representatives from Arif Habib Group, CEO and three are independent. Mian Muhammad Mansha, Chairman MCB, serves as the Chairman on the board. Mr. Saqib Saleem is the CEO, having working experience of over thirteen years. With overall assets under management of ~ PKR 53 billion, the company is currently managing sixteen open-end funds and two voluntary pension funds.