The Pakistan Credit Rating Agency Limited
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Madiha Sohail

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PACRA Maintains Stability Rating of AKD Islamic Daily Dividend Fund

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

AKD Islamic Daily Dividend Fund ("AKD IDDF" or the "Fund") reflects the Fund's low-risk profile. The investment objective of the Fund is to provide a competitive return in the form of daily dividend by investing in low-risk and highly liquid Shariah-compliant money market instruments. At the end Jun'23, the exposure in Commercial Papers / Short Term Sukuk (STS) was 8.25% and Cash was 89.59%. The Fund isn't compliant with the criteria of assigned rating; minimum 25% of assets in Govt. Securities/AAA and maximum 25% in AA- rated avenues. However, the Fund should comply with the assigned criteria within a curing period of 60 days. The WAM of the Fund stood at 6 days at the end of Jun'23; limiting the exposure to credit risk. The duration of the Fund was 6 days at the end of Jun’23, limiting the exposure to interest rate risk. As of Jun'23, the unit holding pattern of the Fund was ~96.35% representing top ten investor concentration; exposing the Fund to high level of redemption pressure.
Going forward, the Fund intends to maintain its position in Commercial Papers/Short Term Sukuk and Cash while building position towards AAA rated avenues. Material changes in the fund's asset allocation strategy, impacting its credit quality and/or exposure to interest rate risk, would affect its rating. The assigned rating would remain dependent on the compliance with assigned rating criteria.

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.