PACRA Maintains Stability Rating of Faysal MTS Fund (FMTSF)
|Rating Type||Stability Rating|
The objective of Faysal MTS Fund (FMTSF) is to provide competitive returns primarily through investment in the MTS market.
The fund's mandate is to predominantly invest in Margin Trading System (MTS). MTS is a leveraged product offered by NCCPL. MTS is an undisclosed counterparty market for lenders and borrowers. This is only available for eligible securities also notified by NCCPL. All MTS transactions are entered at financing participation ratio of "15%" for borrower and "85%" for lender. Borrowers are required to pay mark-to-market losses to NCCPL on daily basis in cash. Each MTS contract cannot exceed 60 calender days and on every fortnight, MTS will automatically reduce 1/4 of the contract value. The rating of Faysal MTS Fund reflects comfort drawn on the elaborated and secure system of NCCPL. At end-May17, fund's 71% net assets were invested in MTS transactions, which due to its self-liquidating nature possess less risk over the short tenure. The remaining assets of the fund were invested as cash (16%) with banks rated 'AA-' and Government securities (8%). The unit holding pattern of the fund is highly concentrated towards top 10 investors representing 87% of the fund's assets.
Going forward, As per the Investment Philosophy, the fund would maintain at least 25% allocation towards government securities, upto 25% exposure in margin trading system, exposure in TFCs / Sukuks would be upto 10% restricted to 'AA-' and above instruments; the remaining balance would constitute placements with high rated ('AA-' and above) banks, wherein, deposits with below 'A+' rated banks would not exceed 1%. Adherence to the stated Investment Philosophy of the fund remains crucial for the rating.
The fund intends to keep a minimum of 70% in MTS on quarterly average basis. The fund would observe per scrip exposure limit as per classification of scrips in four categories. The rest of the amount would be invested in other avenues, of which the rating may not be lower than 'A+'. PACRA would monitor continued compliance with the relevant guidelines.
Faysal Asset Management Limited (FAML), licensed to conduct asset management and investment advisory services, was incorporated in 2003 as an unlisted public limited company under company's ordinance, 1984. The major shareholder of FAML is Islamic Investment Company of the Gulf (Bahamas) Ltd (50% stake), followed by Faysal Bank Limited (30% stake). Mr. Razi Ur Rahman Khan, a director of FAML, holds the remaining 20% stake in FAML. Presently, the company is managing a diversified portfolio of nine open-end funds, with combined AUMs of PKR 7.7 billion at end-May'17
The CEO, Mr. Razi-ur-Rahman Khan, has extensive experience in domestic and international capital markets. He is supported by the experienced management staff