The Pakistan Credit Rating Agency Limited
Press Release


Muhammad Usman

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PACRA Maintains Stability Rating of Alhamra Islamic Income Fund (Formerly: MCB Islamic Income Fund)

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

The investment objective of the fund is to generate superior risk-adjusted returns by investing in short, medium and long-term Shariah-compliant fixed income instruments.

The rating incorporates the fund's moderate credit quality and liquidity profile emanating from the fund's policy to invest only in good quality Shariah-compliant instruments. At end-Dec17, 29.2% of the fund's net assets were invested with sukuks, whilst 29% were invested with banks rated 'AAA'. The remaining assets of the fund were invested in good quality corporate sukuks having credit rating of 'A' and 'A+'. Fund's whole exposure with 'A+' and above rating shows the good credit quality of the portfolio. The fund has well diversified unit holding pattern, with top10 investors representing 62% of the fund size.

Going forward, the fund intends to maintain its exposure towards bank placements (above 44%) with rest of the fund's assets invested in GoP Ijara and other debt securities. Material changes in the fund's asset allocation strategy, which could negatively impact the fund's credit quality and exposure to interest rate risk, remains 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.