PACRA Maintains Stability Rating of Dawood Income Fund

The investment objective of the fund is to provide a return greater than that offered by other investments of similar risk profile through investments in a portfolio of money market instruments

The rating reflects the intended moderate risk strategy, current credit quality and liquidity profile of the fund. At Dec-17, the fund is majorly invested in bank placements (i.e. 89%). The remaining assets were exposed in A+ rated TFC/Sukuk ~10%. The fund has 34% exposure in AA- rated instruments and 57% exposure in A+ rated instruments. The unit holding pattern of the fund is highly concentrated with top10 investors representing 85% of the fund's assets, (of which ~28% are owned investments) which exposes the fund to a moderate level of redemption pressure.
Going forward, the fund plans to increase its exposure in Government Securities up to 50%. The fund plans to maintain 10-15% exposure in A+ rated Debt Instruments and remaining assets in AA- and above rated bank’s placements. 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
786 Investments Limited (Formerly: Dawood Capital Management Limited), commenced its business operations back in 1993. Later on, First Dawood group took over the company, and currently owns ~50% stake. The other key shareholder (15%) in Bank of Khyber. First Dawood Group, a renowned business group, has interest in family takaful, modarba, and Shariah investment advisory. With an AUM base of PKR 657mln at end Dec-17, 786 Investments is managing three open end funds; categorised as Shariah compliant asset allocation and conventional Funds.

786 Investments has a seven member board including the CEO, Ms Tara Uzra Dawood. She holds a Doctorate in judicial science from Harvard Law School. She is on the board of directors of MUFAP and has around two decades of professional experience in mergers and acquisitions, corporate law and investment management. The other board members comprise three independent directors including Mrs Shafqat Sulatana, also the chairperson of the board. She is a professional banker and possess around four decades of experience in financial sector. The company has a lean management structure. The team is largely new to 786 Investments but comprises seasoned professionals.