PACRA Maintains Stability Rating of NIT Government Bond Fund
|Rating Type||Stability Rating|
The fund's mandate is to generate reasonable return along with the safety of capital for its unitholders with minimal risk by primarily investing in bonds and short-term debt securities issued by Government of Pakistan (GoP).
The rating reflects the change in the investment strategy to reduce the duration of the fund. At end-Dec 17, the portfolio comprised bank placements of 36% with the majority of exposure with 'AA+' and 'AA-' rated banks. The remaining assets of the fund (i.e. 45%) were invested with T-Bills followed by 18% in PIBs, which due to its self-liquidating nature possess less risk over the short tenure. On the monthly average basis, the fund duration stood at 30 days. The unit holding pattern of the fund is highly concentrated with top10 investors representing 77% of the fund's assets, (of which ~40% are owned investments) which exposes the fund to a low level of redemption pressure.
Going forward, the fund intends to maintain exposure in T-bills, some part of the investment in banks having a good credit rating. 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 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.