The Pakistan Credit Rating Agency Limited
17-May-24
Analyst
Hassaan Ahmad
Hassaan.Ahmad@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
Related Research
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PACRA Maintains Stability Rating of ABL Islamic Income Fund
| Rating Type | Stability Rating | |
|
Current (17-May-24 ) |
Previous (17-Nov-23 ) |
|
| Action | Maintain | Initial |
| Long Term | A+(f) | A+(f) |
| Short Term | - | - |
| Outlook | Stable | Stable |
| Rating Watch | - | - |
ABL Islamic Income Fund (or the “Fund”) is a medium-risk profile Fund. The objective of the fund is to provide investors with an opportunity to earn higher income over the medium to long term by investing in a diversified portfolio consisting of different money market and debt instruments permissible under the Shariah principles. At the end of Dec'23, the Fund had allocated ~42.00% in TFCs/Sukuks, around ~51.53% in Bank placements, and ~6.47% invested in other avenues. While the credit quality of the Fund was 27% in the AAA category, 39% in the A+ category, and 10% in the A category. The duration of the Fund stood at 104 days at the end of Dec’23, limiting exposure to interest rate risk. The WAM of the Fund stood at 1331 days at the end of Dec’23, exposing very high credit risk. At the end of Dec’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 the very high level of redemption pressure. During Dec’23, ABL Income Fund posted an annualized return of 20.02% against the Benchmark return of 11.02% thereby overperforming the Benchmark by 900bps.
Going forward, any material changes in the investment policy and/or compliance with the rating criteria for the assigned rating would have an impact on the ratings.
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 169bln at the end of Dec'23.