PACRA Assigns Initial Stability Rating to Faysal Islamic Special Income Fund

Faysal Asset Management Limited launched the Islamic Special Income Fund (or the "Fund") on June 20, 2022, for making its portfolio more diverse and meaningful for its investors. The primary objective of Faysal Islamic Special Income Fund is to provide competitive risk-adjusted returns to its investors by investing in a diversified portfolio of long, medium, and short-term Shariah Compliant instruments while taking into account liquidity considerations. The rating reflects the strength of the of Faysal Islamic Special Income Fund's strong credit and interest rate risk profile. The Fund's good credit quality and sound liquidity profile emanate primarily from its mandate to invest in bank deposits and other low-duration avenues. The WAM and duration of the fund stood at 1 day as of Dec'23; hence the credit risk and interest rate risk are minimal. At the end Dec'23, ~97.48% of funds assets were allocated to banks Primarily rated AA. The fund has demonstrated strong performance, evidenced by a one-year trailing return of 26.97%, outperforming the benchmark of 7.23%. The fund unit holding pattern is highly concentrated with the top 10 investors representing ~76% of the net assets, which exposes the fund to a medium level of redemption pressure. However, the adequate liquidity profile gives comfort to manage the redemption pressure.
Going forward, any material changes in the funds asset allocation strategy, impacting its credit quality and/or exposure to interest rate risk, would affect the rating. While compliance with the rating criteria for the assigned rating would remain imperative.

About the Entity
Faysal Funds (Faysal Asset Management Limited) is a subsidiary of Faysal Bank Limited (FBL). FBL is holding 99.99% shares of Faysal Funds. Faysal Funds was incorporated in Pakistan under the Companies Ordinance, 1984 on August 6, 2003 as an unlisted public limited company and is licensed by the Securities and Exchange Commission of Pakistan to carry out asset management and investment advisory services.
The Board of Directors of the Company comprises five members, including the Mr. Yousaf Hussain has over 26 years of professional experience, primarily at ABN AMRO Bank where he held multiple senior managerial positions including those within the Corporate / Credit and Transaction Banking functions. He has been with Faysal Bank since August 2008, with a significant contribution to the franchise. Mr. Nadir Rahman is CEO and he has extensive, hands on experience of capital markets in Pakistan and internationally, stretching over 32 years, of which 16 years have been in C level positions, including board level experience with listed, unlisted, and international companies. His core areas of expertise are business development, operations, investment management, M&A and corporate restructuring. He has advised on numerous capital market transactions, including the largest de-listing in Pakistan’s history. The Company is managing a diversified portfolio of funds, with AUMs of ~PKR 133.81bln at the end of Dec'23.