The Pakistan Credit Rating Agency Limited
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Ayesha Qasim

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PACRA Maintains Stability Rating of NIT Islamic Income Fund

Rating Type Stability Rating
(30-Jun-18 )
(12-Jul-17 )
Action Maintain Initial
Long Term AA-(f) AA-(f)
Short Term - -
Outlook Stable Stable
Rating Watch - -

The investment mandate of the fund is to generate a stable Shariah compliant income stream, while seeking maximum possible preservation of capital, over the medium to long-term period, by investing in a diversified portfolio of Shariah Compliant fixed income and money market instruments.
The rating reflects the fund's low-risk asset allocation by investing in strong credit quality investment avenues. At end-Dec-17, ~85% of the fund's exposure was invested as cash with “AA+” rated bank and 7% with ‘’A+’’ rated bank. The remaining portfolio was invested in good quality Corporate Sukuks ~8%. The unit holding pattern of the fund is highly concentrated with top10 investors representing 66 % of the total fund size of which ~22% are owned investments, which reflects a low level of redemption risk.

Going forward, the fund intends to increase its exposure in corporate sukuks. The remaining assets of the fund will remain invested in cash balances. 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
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 a major shareholder (41.65%) in the company. Other shareholders comprise prominent businessmen and commercial banks having a shareholding of 8.33% each. These shareholders are represented by a board of eleven directors. The company is currently one of the largest asset management company in Pakistan with a portfolio of 8 open-end funds & 2 pension funds. The open end funds have an AUM base of ~PKR 97bln at end-Dec17.

The Managing Director, Mr. Manzoor Ahmed, holds profound experience in the domestic mutual fund industry. He is supported by a team of qualified and experienced professionals.

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.