The Pakistan Credit Rating Agency Limited
17-Nov-23
Analyst
Madiha Sohail
madiha.sohail@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
Related Research
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PACRA Assigns Initial Stability Rating of ABL Income Fund
| Rating Type | Stability Rating | |
|
Current (17-Nov-23 ) |
||
| Action | Initial | |
| Long Term | A+(f) | |
| Short Term | - | |
| Outlook | Stable | |
| Rating Watch | - | |
ABL Income Fund (or the “Fund”) is a medium-risk profile Fund. The objective of the fund is to earn a competitive risk-adjusted rate of return by investing in a blend of short, medium, and long-term fixed-income and debt instruments. At the end of Sep’23, the credit quality of the Fund was ~5.4% in Govt/AAA, ~31.3% in double AA+, ~2.81% in double AA, ~12.1% in double AA- whereas ~35.8% in single A+, ~3.9% in single A and ~8.6% in others. The AUMs of the Fund stood at PKR 1,720mln at the end of Sep’23 (Dec’22: PKR 8,323mln). At the end of Sep'23, the Fund had allocated ~58.12% in TFCs/Sukuks rated, around ~32.9% in cash deposit, and ~0.4% invested in PIBs (5-Year). The duration of the Fund stood at 104 days at the end of Sep’23, limiting exposure to interest rate risk. The WAM of the Fund stood at 1331 days at the end of Sep’23, exposing high credit risk. At the end of Sep’23, the unit holding pattern of the fund stood at ~83.02 % representing the top ten investor concentration out of which ~79.8% is of related party exposure, hence, giving rise to high level of redemption pressure. During the month of Sep’23, ABL Income Fund posted an annualized return of 14.49% against the Benchmark return of 20.17% thereby underperforming the Benchmark by 568 bps.
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 Sep'23.