PACRA Maintains the Stability Rating of Alfalah Islamic Sovereign Fund

Alfalah Islamic Sovereign Fund ("AISF" or "the Fund") is categorized under a medium-risk Islamic Sovereign Income Scheme, with the objective of generating competitive returns while maintaining a relatively low risk profile through investments primarily in Shariah-compliant Government Securities, Shariah-compliant short-term Sukuks/commercial papers, Islamic Banks, and licensed Islamic Banking Windows of conventional banks. The Fund currently operates through three plans, namely Alfalah Islamic Sovereign Plan-1, Alfalah Islamic Sovereign Plan-2, and Alfalah Islamic Sovereign Plan-3. As of Mar'26, the Fund's Assets Under Management (AUM) stood at PKR 6,142mln, compared to PKR 11,158mln as of Sep'25 (the last review), reflecting a decline in fund size during the review period amid changing investor allocations and market conditions. On an AUM-weighted basis, the Fund's portfolio remained predominantly invested in sovereign-backed avenues, with approximately 78% allocated to Government-guaranteed securities, ~19% maintained in cash and cash equivalents, and the remaining ~3% in other permissible investments. From a credit quality perspective, the Fund maintained a strong credit profile, with approximately 82% of assets invested in AAA-rated and Government-backed securities, ~15% in AA+ rated instruments, and a nominal exposure of ~0.01% in AA-rated avenues. The predominance of sovereign-backed and highly rated counterparties supports the Fund's creditworthiness and remains aligned with the assigned rating level. The Fund's AUM-weighted Weighted Average Maturity stood at 647 days as of Mar'26. The relatively long maturity profile reflects heightened sensitivity to profit rate movements and market valuation changes, primarily due to the Fund's substantial allocation towards longer-tenor sovereign Islamic instruments. While this duration profile may expose the Fund to mark-to-market volatility during periods of changing profit rates, it also positions the Fund to benefit from favorable movements in the sovereign yield environment over the investment horizon. In terms of performance, the Fund generated an AUM-weighted 365-day return of 8.85% as of Mar'26, compared to its benchmark return of 10.67%. The relative underperformance was primarily attributable to valuation adjustments on longer-duration sovereign holdings amid evolving market yield dynamics. Nevertheless, the Fund's investment strategy remains focused on maintaining exposure to high-quality sovereign Islamic instruments while preserving portfolio stability.
Going forward, any material changes in the investment policy or the devised rating criteria for the assigned rating would have an impact on the rating.

About the Entity
Alfalah Asset 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 (Mr. Atif Aslam Bajwa) and the Chief Executive Officer (Mr. Khaldoon Bin Latif). 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 361bln at end Mar'26.