The Pakistan Credit Rating Agency Limited
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Madiha Sohail

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PACRA Assigns Initial Stability Rating of ABL Government Securities Fund

Rating Type Stability Rating
(17-Nov-23 )
Action Initial
Long Term AA-(f)
Short Term -
Outlook Stable
Rating Watch -

ABL Government Securities Fund (or the 'Fund') is a medium-risk profile Fund. The objective of the Fund is to deliver optimal risk-adjusted returns by investing mainly in a mix of short to long-term Government Securities and other debt Instruments. The Fund's credit quality was ~77.5% in Govt/AAA, ~0.02% in double AA+, ~18.6% in double AA- and ~3.8% in other avenues at the end of Sep’23. The AUMs of the Fund stood at PKR 1,314mln at the end of Sep’23 (Dec’22: PKR 770mln). The Fund had invested ~37% in T-bills, ~36.1% in Floater rate PIBs (2yr), around ~20.1% in cash, and about ~3% in TFC/Sukuks. The duration of the Fund stood at 231 days at the end of Sep’23, since the fund had invested in fortnightly floaters, hence the exposure to interest rate risk is limited. The WAM of the Fund stood at 258 days at the end of Sept’23 exposing high credit risk. The credit risk would remain manageable since the investment is in Government securities. At the end of Sept’23, the unit holding pattern of the Fund stood at 84.35%, representing top ten investor concentration, keeping the redemption pressure high. However, on the back of a strong liquidity profile, the redemption pressure would be manageable. During the month of Sep’23, ABL Government Securities Fund posted an annualized return of 16.48% against the Benchmark return of 19.99%, thereby underperforming the Benchmark by 351 bps. However, it remained in line with the industry averages.
Going forward, the Fund intends to maintain its current asset allocation. 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
Incorporated in 2007, ABL AMC is a wholly owned subsidiary of Allied Bank Limited (ABL). ABL operates with 1,400 plus branches including 117 Islamic banking branches, 8 Digital/ Self Service branches & 2 overseas branches. ABL AMC possesses licenses for asset management, pension management and investment advisory services. As the leading private sector asset
management and investment advisory Company in Pakistan, offerings include a comprehensive range of both Conventional and Shariah Compliant investment solutions across all major asset classes. Assets under management of the Company stood at ~PKR 134.25bln at the end of Sep'23.

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.