PACRA Maintains Stability Rating of NAFA Government Securities Liquid Fund
|Rating Type||Stability Rating|
The fund's objective is to generate an optimal return with minimum risk, to provide easy liquidity and a reasonable income to its unitholders by investing primarily in short-term Government Securities.
The rating reflects the strong credit quality and liquidity profile of the fund. This emanates from maintaining a high exposure to government securities ~44%. The fund continued to remain heavily invested in T-Bills. Fund's average exposure towards interest rate risk was sizeably minimal. In Dec-18, the duration of the fund was 49 days. The unit holding pattern of the fund represents moderate liquidity risk as top 10 investors represent 73% of the fund's assets at end-Dec 18, however, the comfort can be drawn from the liquid nature of the investments.
Going forward, the rating remains dependent on maintaining at least 70% allocation towards AAA exposure with average portfolio duration not exceeding 45 days. Meanwhile, the remaining assets of the fund must be placed with scheduled banks having very strong credit quality.
NBP Fund Management Limited, established in 2005, is licensed by Securities and Exchange Commission (SECP) to carry out asset management and investment advisory business. National Bank of Pakistan is the largest shareholder of the company with a stake of ~54%. During the year, Baltoro Growth Fund acquired the entire (36%) stake of Alexandra Fund Management Pte. Ltd. in the company. Baltoro Capital is a Pakistan focused private equity firm. Baltoro has made three investments in the pharmaceutical, renewable energy and financial services sectors. It is actively deploying its funds in businesses positioned to achieve extraordinary growth. The CEO of NBP Fund Management Limited, Dr. Amjad Waheed, also holds a 10% stake in the company.
The company’s nine-member Board of Directors include three independent directors and the CEO. During the year, there has been some new induction in the Board of Directors. The company is currently managing a diversified fund slate of twenty-six mutual funds and two pension funds.