The Pakistan Credit Rating Agency Limited
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Madiha Sohail

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PACRA Maintains Stability Rating of Alfalah GHP Sovereign Fund

Rating Type Stability Rating
(13-Oct-23 )
(13-Apr-23 )
Action Maintain Maintain
Long Term AA-(f) AA-(f)
Short Term - -
Outlook Stable Stable
Rating Watch - -

Alfalah GHP Sovereign Fund (or the "Fund") is a medium-risk profile Fund. The investment objective of the Fund is to provide an investment medium whereby investors can participate in a portfolio that will seek to generate competitive income. The rating reflects moderate strength of the Fund's credit and interest rate risk profile. At the end of Jun'23, the Fund had allocated ~80% in Government securities (PIBs, Floater PIBs & T-Bills), ~8.8% in Bank deposits, placements & other banking instruments in AA- rated and above, ~11% in other assets. The duration of the Fund at the end Jun’23 was 68 days, limiting the fund exposure to interest rate risk. The WAM of the Fund was 353 days at the end Jun’23, exposing the Fund to high level of credit risk, however considering the investment in good credit rating avenues majorly in Governments securities the credit risk is at manageable level. During FY23, the Fund generated a return of 16.1% against the fund's benchmark returned 18.2%. The unit holding pattern of the Fund concentration was 82% represented by top ten Investors; giving rise to a high level of redemption pressure which is manageable on the back of strong liquidity profile.
Material changes in the funds asset allocation strategy, impacting its credit quality and/or exposure to interest rate risk, would affect the rating.

About the Entity
Alfalah Asset Management Limited (Formerly: Alfalah GHP Investment Management Limited) was incorporated on October 18, 2004 as an unlisted public limited company and is licensed by the Securities and Exchange Commission of Pakistan to manage open-ended mutual funds and offer investment advisory services. The Company was established as joint venture Non-Banking Finance Company by Bank Alfalah Limited and GHP Arbitrium. The Company provides a wide range of mutual funds and pension funds both in conventional and Shariah compliant category. The Company also provides investment advisory services to HNW individuals and corporate clients.
The Company’s board of directors comprises eight members including the Chairman and the Chief Executive Officer. The board is dominated by representatives of MAB Investments and Bank Alfalah Limited. The board has two independent and five non-executive directors. The board members possess strong profile and skills suited to the financial services industry. Assets under management of the Company stood at ~PKR 99.4bln at end June'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.