The Pakistan Credit Rating Agency Limited
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Muhammad Usman

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PACRA Maintains Stability Rating of MCB DCF Income Fund

Rating Type Stability Rating
Action Maintain Maintain
Long Term A+(f) A+(f)
Short Term - -
Outlook Stable Stable
Rating Watch - -

The investment objective of the fund is to deliver superior fixed income returns by investing in an optimal mix of authorized debt instruments while taking into account capital security and liquidity considerations.

The rating reflects the fund's strong credit quality and sound liquidity profile emanating from sizeable investments as daily cash balances. The portfolio of the fund at end-Dec17 primarily comprised bank balances (42.1%) with banks rated 'AA+' & above, while 1% exposure was with Government securities. The remaining assets of the fund were invested with financial sector TFCs [(i.e. 26%) with 'AA-' & above], spread transactions (1.2%) and margin trading system (7.5%) which due to its self-liquidating nature, possesses less risk over a short tenure. The unit holding pattern of the fund remains well diversified with top 10 investors representing 34% of the fund's assets.

Going forward, the fund intends to maintain its exposure towards bank placements with rest of the fund's assets invested in TFC, Govt-Securities, spreads, MTF and other debt instruments. 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.

About the Entity
MCB Arif Habib Savings & Investments Limited (MCBAH) incorporated in August 2000 and listed on the Karachi Stock Exchange, is a major player in the mutual fund industry of Pakistan. During Jun11, MCB Asset Management Company was merged into Arif Habib Investments. The objective was to achieve synergies in the asset management business and access a wider distribution network.

Company’s eight members BoD, two representatives from MCB, two representatives from Arif Habib Group, CEO and three are independent. Mian Muhammad Mansha, Chairman MCB, serves as the Chairman on the board. Mr. Saqib Saleem is the CEO, having working experience of over thirteen years. With overall assets under management of ~ PKR 53 billion, the company is currently managing sixteen open-end funds and two voluntary pension funds.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.