PACRA Maintains the Stability Rating of MCB Pakistan Sovereign Fund

MCB Pakistan Sovereign Fund ("MCB PSF" or "the Fund") is categorized under a medium-risk Income Scheme, with the objective of generating income primarily through investments in Government Securities. As of Jun'26, the Fund's Assets Under Management (AUM) stood at PKR 13,881mln, compared to PKR 24,387mln as of Dec'25 (the last review), reflecting a decline during the review period. The decline in AUM was primarily attributable to the reduction in the overall size of the Income Fund category during the period. In terms of asset allocation, approximately 84% of the portfolio was invested in Pakistan Investment Bonds (PIBs), ~12% in cash and cash equivalents, and ~2.4% in GoP Ijarah Sukuks as of end-Jun'26. The portfolio remained predominantly concentrated in sovereign-backed instruments, consistent with the Fund's investment objective. The significant allocation to PIBs provides a strong sovereign credit foundation, while the cash position provides an additional liquidity buffer and flexibility to manage potential redemption requirements and portfolio rebalancing. From a credit quality perspective, approximately 96% of the Fund's assets were invested in Government securities and AAA-rated instruments, while ~3.2% was allocated to AA+ rated avenues. The Fund's overall credit profile remains very strong. The significant concentration in sovereign-backed and highest-rated instruments provides substantial support to the Fund's creditworthiness and keeps credit risk well contained. The Fund's Weighted Average Maturity (WAM) stood at 237 days as of Jun'26, reflecting relatively high sensitivity to interest rate movements and associated mark-to-market risk. The duration profile is primarily driven by the Fund's substantial allocation to PIBs, exposing the portfolio to valuation fluctuations in response to changes in market yields. While the relatively longer duration increases short-term interest rate sensitivity, the Fund's strong sovereign credit profile continues to provide considerable support from a credit risk perspective. In terms of performance, the Fund generated a 365-day annualized return of 8.20% as of Jun'26, compared to its benchmark return of 10.82%, resulting in an underperformance of approximately 262 basis points. The relative underperformance reflects the Fund's positioning in sovereign instruments and prevailing market yield dynamics during the review period. Nevertheless, the Fund continues to maintain a high-quality portfolio that remains aligned with its stated investment mandate.
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 ~PKR 387 Billion as of Jun'26.