Analyst
Muhammad Usman
muhammad.usman@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
Related Research
PACRA Maintains Stability Rating of NAFA Islamic Money Market Fund
Rating Type | Stability Rating | |
Current (18-Apr-19 ) |
Previous (28-Dec-18 ) |
|
Action | Maintain | Maintain |
Long Term | AA(f) | AA(f) |
Short Term | - | - |
Outlook | Stable | Stable |
Rating Watch | - | - |
The fund objective is to provide a competitive return with maximum possible capital preservation 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. The fund’s portfolio at Dec-18, comprises cash balances ~99%. Fund's portfolio duration of 1 day results in a very low exposure towards interest rate volatility. The fund's unit holding pattern remains concentrated with the top10 investors comprising ~98% of the fund's net assets, of which almost all of the investment is AMC’s own investment which exposes the fund to a very low level of redemption pressure.
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 60 days.
About
the Entity
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.