PACRA Maintains Stability Rating of NAFA Income Fund
|Rating Type||Stability Rating|
The investment objective of the fund is to earn competitive rate of return for its unit holders by investing in money market and debt securities having good credit quality.
The rating reflects improvement in credit quality, low exposure against interest rate volatility, and diversified sectoral exposure in assets. At end-May17, fund's exposure with Government securities was 2.7%, exposure towards banks placement was (7.9%), and TFC (10.3%) and banking deposits were (64%). The unit holding pattern of the fund is highly concentrated with top10 investors representing (98.5%) which exposes the fund to redemption pressure.
Going forward the fund intends to maintain its allocation to good quality debt instruments (20%) with the remaining assets invested in government securities and cash balance with a minimum rating of 'A' and above. Material changes in the fund's asset allocation strategy, which could negatively impact the fund's credit quality and exposure to interest rate risk, remain critical for the rating.
NAFA was incorporated in August 2005. National Bank of Pakistan (NBP) is the major shareholder of NAFA with 54% stake, followed by Alexandra Fund Management Pte. Ltd - 36% stake. With an asset base of PKR ~2trl at end-Dec16, NBP is the one of the country's largest commercial bank. The CEO of NAFA holds a stake of 10% in the company. Presently, the company is managing a diversified portfolio of 22 open-end funds (12 Shariah compliant & 10 conventional), two pension schemes and several discretionary portfolios with AUM of PKR 109bln at end May-17.
NAFA’s nine-member BoD comprises the company’s CEO, three representatives of NBP, two representatives of Alexandra Fund and three independent directors. During the year Mr. Nausherwan Adil – Senior Executive Vice President & Group Chief Operations of NBP, is the chairman of the board. The founding CEO, Dr. Amjad Waheed, CFA, holds a Doctorate in Business Administration; he has extensive experience in domestic and international capital markets. He is supported by an experienced and qualified team of professionals.