The Pakistan Credit Rating Agency Limited
12-Apr-19
Analyst
Ayesha Qasim
ayesha.qasim@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
Related Research
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PACRA Maintains Stability Rating of NIT Islamic Income Fund
| Rating Type | Stability Rating | |
|
Current (12-Apr-19 ) |
Previous (31-Dec-18 ) |
|
| Action | Maintain | Maintain |
| Long Term | AA-(f) | AA-(f) |
| Short Term | - | - |
| Outlook | Stable | Stable |
| Rating Watch | - | - |
The objective of the NIT Islamic Income 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 good credit quality investment avenues. At end Dec-18, ~73% of the fund's exposure was invested as cash balances with banks having minimum credit rating of 'AA-'. The remaining portfolio (~17%) was invested in sukuks of corporates and financial institutions. The unit holding pattern of the fund is highly concentrated with top ten investors representing 70 % of the total fund size of which ~30% are owned investments, which reflects 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
National Investment Trust Limited was established in 1962 as an unquoted public limited company. It is the first asset management company of Pakistan and is the pioneer of domestic mutual fund industry. Company’s Board of Directors currently comprise eleven board members out of which ten are non-executive. Mr. Adnan Afridi has been appointed as the Managing Director of the company in Feb-19. The authority for appointment of CEO/Managing Director lies with the Government of Pakistan.
Mr. Adnan Afridi, Managing Director of the company, holds profound experience in the financial services and capital markets. He is supported by a team of qualified and experienced professionals. The company is currently one of the largest asset management companies in Pakistan with a portfolio of eight open end funds and two pension funds with overall AUMs of ~PKR 85 billion at end Dec-18.