The Pakistan Credit Rating Agency Limited
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Muhammad Junaid

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PACRA Maintains Stability Rating of MCB DCF Income Fund

Rating Type Stability Rating
(09-Mar-22 )
(09-Sep-21 )
Action Maintain Maintain
Long Term AA-(f) AA-(f)
Short Term - -
Outlook Stable Stable
Rating Watch - -

MCB DCF Income Fund (or the ‘Fund’) is a medium risk-profile fund. The rating reflects the adequate strength of the Fund's credit and interest rate risk profile. The fund size grew by 18% in 2HCY21. At end-Dec'21, ~55% of Fund's assets were invested with banks primarily rated 'AAA'. The Fund had placed ~32% of its portfolio into government securities. It had invested the remaining 10% of the net assets into TFCs rated ‘AA’ and above. The weighted average maturity of the Fund is 1.7 years. At end-Dec'21, the average duration of the Fund was within 90 days. The unit holding pattern of the Fund is modestly concentrated with top ten investors representing ~30% of the Fund's assets.
Going forward, following the investment policy and market circumstances, the Fund may increase exposure in banks, spread transactions, and short-term government papers. Material changes in the Fund's asset allocation strategy, impacting its credit quality and/or exposure to interest rate risk, would affect the rating.

About the Entity
MCB-Arif Habib Limited Savings and Investments Limited (MCB-AH or the "Company") is a public listed company, regulated by the SECP. MCB-AH holds licenses for Asset Management, Investment Advisory, and Pension Fund Management. MCB-AH caters to both conventional and Shariah-compliant clientele and is currently managing a diverse product slate of fifteen open-end funds and two voluntary pension schemes. MCB-AH is also managing one of the largest AUMs under the SMA segment and holds a significant position in the investment advisory domain.
The major shareholders of MCB-AH are MCB Bank Limited ~51%, Arif Habib Corporation Limited ~30%, and Adamjee Insurance Company Limited ~8%. The general public holds the remaining ~11% of the shares. Mr. Saqib Saleem is the CEO of the Company. MCB-AH's control vests in an eight-member board of directors, including the CEO. There are four non-executive directors, while three directors are independent. The AUMs (CIS & VPS) of MCB-AH increased to ~PKR 110,012mln at end-Dec'21 (Jun'21: ~PKR 97,679mln).

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.