PACRA Assigns Initial Stability Rating to ABL Islamic Sovereign Fund

ABL Islamic Sovereign Fund - Plan I (or the ‘Plan’) presents a calibrated risk-reward proposition tailored for investors with moderate risk tolerance, seeking Shariah-compliant exposure to sovereign credit markets. . The objective of the Fund is to provide competitive returns to its investors by investing The Fund, through its investment plans, will seek maximum possible preservation of capital and a reasonable rate of return by investing in Shariah Compliant Government Securities, Shariah Compliant Deposits, Shariah Compliant Short term sukuk and commercial paper and shariah compliant money market instruments. As of December 2024, the Plan’s weighted average maturity (WAM) of 627 days reflects moderate duration risk, strategically balanced against its predominance (60% of AUM) in AAA-rated sovereign sukuk, which mitigates credit risk through explicit government guarantees. The portfolio’s 35% structural liquidity buffer in cash and Shariah-compliant near-cash instruments ensures operational flexibility to address redemption exigencies and exploit tactical opportunities during market dislocations. Corporate sukuk allocations (3%) target investment-grade issuers with strong debt-service metrics, enhancing yield while adhering to stringent Shariah screening criteria.
The Plan demonstrates low unit holder concentration risk, with the top 10 investors comprising ~12% of AUM, reducing susceptibility to systemic liquidity pressures. Performance metrics for December 2024 highlight the efficacy of its active management framework: a 16.58% annualized return outperformed the benchmark by 421 basis points (12.37%), driven by alpha-generating duration positioning and dynamic liquidity deployment amid rate volatility.
Going forward, the Fund intends to maintain its current asset allocation. Material deviations from existing allocation parameters particularly shifts in credit quality, duration exposure, or liquidity thresholds , would affect the rating.

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 365bln at the end Dec'24.