The Pakistan Credit Rating Agency Limited
12-Nov-24
Analyst
Hassaan Ahmad
Hassaan.Ahmad@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
Related Research
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PACRA Assigns Initial Stability Rating to MCB DCF Fixed Return Fund II
| Rating Type | Stability Rating | |
|
Current (12-Nov-24 ) |
||
| Action | Initial | |
| Long Term | AAA(f) | |
| Short Term | - | |
| Outlook | Stable | |
| Rating Watch | - | |
MCB DCF Fixed Return Fund II ("MCB DCFFRF‐II" or the "Fund") is a moderate risk profile Fund. The objective of MCB DCF Fixed Return Fund II is to provide a promised fixed return to Unit Holders by investing in fixed income securities. The Fund’s AUMs as of the end of Sep'24 were PKR 114 million. The Fund's credit quality is very good and is in line with assigned rating. As of the end of Sep'24, the Fund's investment was ~99.9% in government securities/AAA-rated avenues, with the remaining invested in other categories. At the end of Sep'24, most of the investment was held in T‐Bills (~98.9%), followed by cash (~1.0%), with the remainder in other avenues. The WAM of the Fund stood at 211 days at the end of Sep'24, indicating higher exposure to credit risk. The Duration of the Fund was stood at 210 days at the end of Sep'24, exposing the Fund to high interest rate risk. As of the end of Sep'24, the concentration of the top 10 investors in the Fund stood at ~89.85%, exposing the Fund to very high redemption pressure. Redemption pressure is addressed through the maintenance of sufficient liquidity.
Going forward, any material changes in the investment policy and/or compliance with the rating criteria for the assigned rating would have an impacts on the rating.
About
the Entity
MCB Investment Management Limited (MCBIM or the "company") is a public listed company regulated by the SECP. MCBIM holds licenses for asset management, investment advisory, and pension fund management. MCBIM caters to both conventional and Shariah-compliant clientele and currently manages a diverse product slate of twenty-five open-end funds and four voluntary pension schemes. MCBIM also manages one of the largest AUMs in the SMA segment and holds a significant position in the investment advisory domain.
The major shareholders of MCBIM are MCB Bank Limited (~81.42%) and Adamjee Insurance Company Limited (~7.59%), with the general public holding the remaining ~11% of the shares. Mr. Khawaja Khalil Shah is the CEO of the company. There are four non-executive directors, three of whom are independent, and one executive director (CEO). The AUMs of MCBIM stood at PKR 277bln at the end of Sep'24.