The Pakistan Credit Rating Agency Limited
08-Mar-24
Analyst
Madiha Sohail
madiha.sohail@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
Related Research
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PACRA Maintains Stability Rating of NIT Government Bond Fund
| Rating Type | Stability Rating | |
|
Current (08-Mar-24 ) |
Previous (08-Sep-23 ) |
|
| Action | Maintain | Maintain |
| Long Term | AA(f) | AA(f) |
| Short Term | - | - |
| Outlook | Stable | Stable |
| Rating Watch | - | - |
NIT Government Bond Fund (or the 'Fund') is a medium risk profile Fund. The objective of Fund is to generate the best possible return with minimum risk, for its Unit Holders, by investing primarily in the Government Securities. The assigned rating reflects the Fund's moderate credit risk profile emanating from the Fund's Investment policy to invest in avenues with sound liquidity. The AUMs of the Fund stood at PKR 3.13bln at the end of Dec’23 (Dec’22: PKR 2.5bln). The Fund had allocated ~71.83% in T-Bills, ~12.78% in PIBs, ~4.98% in AA- and above rated banks as of Dec'23. The WAM of the Fund stood at 293 days at the end of Dec'23. However, credit risk is high due to major investment in Govt securities. The duration of the Fund stood at 226 days at the end of Dec'23, exposing the Fund to high-interest rate risk. The unit holding pattern of the Fund stood at ~67.7% at the end of Dec’23, representing top ten investor concentration; exposing the Fund to redemption pressure. However, the ability to meet redemption remained sound on the back of the liquid profile. The Fund's performance during CY23 remained in line with the benchmark and gave an annualized return of 20.7%.
Going forward, any material changes in the investment policy would remain imperative. While compliance with the devised rating criteria for the assigned rating would remain critical. Risk may vary slightly from time to time considering the volatility of economic conditions.
About
the Entity
National Investment Trust Limited was established in 1962 and is a pioneer in the mutual fund industry. The Company’s Board of Directors currently comprises eleven board members out of which ten are non-executive. Mr. Adnan Afridi, CEO/MD who joined in Feb'19 holds profound experience in the financial services and capital markets. Mr. Manzoor Ahmed is the COO and has a successful track record of managing the operations and investment portfolio of the Company. The Company is currently one of the largest asset management companies in Pakistan with a portfolio of sixteen open-end funds which includes two non-public funds namely NIT-SEF and NIT-EMOF, four voluntary pension schemes, and an exchange-traded fund. The assets under management of the Company stood at ~PKR 123.2bln at the end-Dec'23.