The Pakistan Credit Rating Agency Limited
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Madiha Sohail

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PACRA Maintains Stability Rating of AKD Islamic Income Fund

Rating Type Stability Rating
(07-Sep-23 )
(06-Mar-23 )
Action Maintain Maintain
Long Term AA-(f) AA-(f)
Short Term - -
Outlook Stable Stable
Rating Watch - -

AKD Islamic Income Fund ("AKDISIF or the "Fund") reflects the Fund's medium-risk profile. The investment objective of the Fund is to provide investors with an investment vehicle that strives to enhance capital coupled with regular halal income by investing in Shariah-compliant income investments. At the end of Jun'23, the exposure in Commercial Papers / Short Term Sukuk (STS) was 41.08%, ~22.87% in Sukuk, ~6.16% in Spread Transactions, ~0.75% in Govt. Backed/Guaranteed Securities, and Cash was ~20.20%. The Fund remained compliant with the criteria of assigned rating; maximum 25% in A+ rated avenues. The WAM of the Fund stood at 248 days at the end of Jun'23; exposing the Fund to credit risk. The duration of the Fund was 56 days at the end of Jun’23, exposing the Fund to low interest rate risk. As of Jun'23, the unit holding pattern of the Fund was ~60.57% representing top ten investor concentration; exposing the Fund to redemption pressure.
Going forward, the fund intends to maintain its current exposure in Cash and Sukuk. 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
AKD Investment Management Limited commenced its operations in September 2004. The Company is registered as an Asset Management Company under the Non-Banking Finance Companies Rules, 2003. The Company is sponsored by AKD Group Holdings (Private) Limited [Formerly: Aqeel Karim Dhedhi Securities(Private) Limited] (99.97% ownership). The Board of Directors of the Company comprises seven members, including the CEO Mr. Imran Motiwala, who has been serving as the Chief Executive Officer of AKD Investment Management Limited since 2009. The Company is currently managing eight open-end funds with assets under management of ~PKR 6.5bln at end of Jun'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.