PACRA Maintains Stability Rating of MCB Pakistan Sovereign Fund

MCB Pakistan Sovereign Fund (“MCB-PSF” or “the Fund”) is categorized under a medium-risk profile, with the primary objective of generating stable income through investments predominantly in government securities. The Fund’s investment strategy focuses on capturing returns from sovereign fixed-income instruments while maintaining an adequate liquidity profile and managing duration in line with prevailing market dynamics. As of Dec’25, the Fund’s Assets Under Management (AUM) stood at PKR 24,387mln, compared to PKR 28,813mln as of Jun’25 (the last review), indicating a reduction in the Fund’s size during the review period. In terms of asset allocation, ~73% of the portfolio was invested in Pakistan Investment Bonds (PIBs), followed by ~19% in Treasury Bills, ~4% in cash holdings, and ~3% in GoP Ijarah Sukuks, with the remaining balance allocated to other permissible instruments. The portfolio composition reflects a duration-oriented investment strategy aimed at capturing yield opportunities in medium- to long-tenor sovereign securities while maintaining sufficient liquidity. From a credit quality perspective, approximately ~97% of the Fund’s assets were invested in Government Securities and AAA rated instruments, ~1% in AA+ rated exposures, with the remaining exposure in other high-quality instruments. This high concentration in sovereign and top-tier credit avenues provides strong support to the Fund’s overall credit profile and limits exposure to default risk. As of Dec’25, the Fund’s Weighted Average Maturity (WAM) stood at 548 days, reflecting moderate duration exposure and a measured sensitivity to interest rate movements, consistent with the Fund’s sovereign income strategy. On the investor side, the unit holding pattern indicates a degree of concentration, with the top 10 investors accounting for ~64% of the Fund’s total holdings as of Dec’25, thereby suggesting moderate redemption risk. However, the Fund’s exposure to highly liquid government instruments provides comfort in managing potential redemption pressures. In terms of performance, the Fund reported a year-to-date annualized return of 10.74% as of Dec’25, marginally above the benchmark return of 10.68%, indicating performance broadly aligned with its investment strategy and market conditions.
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 rating.

About the Entity
MCB Investment Management Limited (MCBIM) is a public listed company regulated by the Securities and Exchange Commission of Pakistan (SECP). It holds licenses for asset management, investment advisory, and pension fund management, catering to both Conventional and Shariah investment solutions. As of Dec 2025, MCBIM manages a diversified portfolio, including 26 Open-End Mutual Funds and 4 Voluntary Pension Schemes, while also maintaining a leading position in Separately Managed Accounts (SMA) and investment advisory services. MCBIM’s major shareholders include MCB Bank Limited (~81.42%), Adamjee Insurance Company Limited (~7.59%), and the general public (~9.28%). Mr. Khawaja Khalil Shah serves as the Chief Executive Officer of the company. The Board comprises a balanced composition of 4 Non-Executive Directors and 3 Independent Directors, ensuring strong governance, objective decision-making, and alignment with regulatory best practices. The Company’s assets under management (AUM) have grown significantly, reaching approximately PKR 429 Billion as of December 2025, reflecting its strong market presence and consistent growth in Pakistan’s asset management industry.