Analyst
Shahzaib Khalid
shahzaib.khalid@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
Related Research
PACRA Assigns Initial Stability Rating to NAFA Islamic Money Market Fund
Rating Type | Stability Rating | |
Current (29-May-18 ) |
||
Action | Initial | |
Long Term | AA(f) | |
Short Term | - | |
Outlook | Stable | |
Rating Watch | - |
The fund's objective is to provide returns by investing in low risk and liquid Shariah Compliant authorized instruments. The rating reflects the fund's very strong credit risk profile emanating from the fund's investment policy to invest in high credit quality investment avenues with sound liquidity. Initially, the fund’s portfolio at March-18, comprises cash balances (99.8%). Fund's portfolio duration of 01 day results in low exposure towards interest rate volatility. The fund's unit holding pattern remains highly concentrated with the top10 investors comprising 100% of the fund's net assets, exposing fund to the redemption pressure. The comfort can be drawn from the liquid nature of investments.
Going forward, the rating remains dependent on maintaining assets in AA or above category, whereas at least 50% allocation towards AA+ exposure with portfolio duration not exceeding 45 days.
About
the Entity
NBP Fund Management Ltd (Formerly NBP Fullerton Asset Management Ltd.) 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 ~2.4trl at Mar-17, NBP is the one of the country's largest commercial bank. The CEO of NAFA holds a stake of 10% in the company. Presently, NBP Funds is managing 23 open ended mutual funds, 2 pension funds and several investment advisory portfolios with total assets under management of over Rs.110 Billion (As of March 31, 2018).
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.