The Pakistan Credit Rating Agency Limited
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Madiha Sohail

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PACRA Maintains Stability Rating of NBP Islamic Daily Dividend Fund

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

NBP Islamic Daily Dividend Fund (or the "Fund) is a low-risk profile fund. The objective of the Fund is to provide competitive return along with daily dividend by investing in shariah-compliant money market instruments. The assigned rating reflects the Fund's strong credit and interest rate risk profile emanating from its low risk investment strategy. The Fund had invested ~89% of cash in bank deposits and placements mainly AA+ and above and ~9.86% in AA and above rated Corporate Sukuk at the end of Jun’23. The duration and WAM of the Fund stood at 21 days at the end of Jun’23, exposing the Fund to low credit risk and interest rate risk. The WAM of the Fund cannot exceed 90 days, thereby providing liquidity along with a high quality credit profile. The unit holding pattern of the Fund stood at ~52.66%, representing the top ten investor concentration exposing the Fund to low redemption pressure. However, the ability to meet redemption remained sound on the back of strong liquid profile. During FY23, the Fund remained compliant with the credit quality criteria barring a minor deviation in two months. The Fund's performance during FY23 beat the benchmark and gave an annualized return of 16.9%.
Going forward, any material changes in the investment policy or the devised rating criteria for the assigned rating would have an impact on the ratings. Risk may vary slightly from time to time considering the volatility of economic conditions.

About the Entity
NBP Fund Management Limited (or the "Company"), established in 2005, is licensed by Securities and Exchange Commission (SECP) to carry out asset management and investment advisory business. National Bank of Pakistan is the largest shareholder of the company with a stake of ~54%. In 2019, Baltoro Growth Fund has acquired the entire 36% stake of Alexandra Fund Management Private Limited in the Company. Baltoro Capital is a Pakistan focused private equity firm. Baltoro Capital has made investments in the pharmaceutical, renewable energy and financial services sectors in Pakistan. It is actively deploying its funds in businesses positioned to achieve extraordinary growth. The CEO of NBP Fund Management Limited, Dr. Amjad Waheed, CFA and family also holds a 10% stake in the company.
The Company’s nine-member Board of Directors includes three independent directors and the CEO. With overall assets under management of PKR ~238bln at end-Jun'23, the Company is currently managing a diversified fund slate of twenty five open-end mutual funds, two voluntary pension schemes and one Exchange Traded Fund.

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.