PACRA Maintains Stability Rating of NIT Income Fund
|Rating Type||Stability Rating|
The fund's investment mandate is to generate competitive stream of returns with moderate level of risk for its unitholders, by investing primarily in portfolio of fixed income securities.
The rating reflects the fund's strong credit quality and sound liquidity profile emanating from sizeable investment in government securities. The portfolio of the fund at end-May-17 is primarily invested in government securities (T-bills: 33.47%, PIBs: 0%). The remaining net assets of the fund are allocated in good quality debt instruments (TFCs: 8.62%) and cash balances placed with good quality banks (56.50% - with the majority of the exposure with AA+). Exposure in margin trading system is 5% which, due to its self-liquidating nature, possesses less risk over a short tenure. The unit holding pattern of the fund is highly concentrated with top10 investors representing 73% of the fund's assets, which exposes the fund to redemption pressure.
Going forward, the fund intends to increase its exposure in government securities along with 10% allocation in TFCs. The remaining assets of the fund will be placed with banks having high credit quality. 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.
NIT is the first asset management company of Pakistan, formed in 1962. The Government of Pakistan (GoP) directly and indirectly through government owned entities is major shareholder (41.65%) in the company. Other shareholders comprise prominent businessmen and commercial banks having shareholding of 8.33% each. These shareholders are represented by a board of ten directors. The company is currently the largest asset management company in Pakistan with a portfolio of seven open end funds & two pension funds. The open end funds has an AUM base of ~PKR 107bln at end-May17.
The Managing Director, Mr. Shahid Ghaffar, holds profound experience in the domestic mutual fund industry. He is supported by a team of qualified and experienced professionals.