The Pakistan Credit Rating Agency Limited
30-Sep-20
Analyst
Usama Zubair
usama.zubair@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
Related Research
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PACRA Upgrades Stability Rating of AKD Aggressive Income Fund
| Rating Type | Stability Rating | |
|
Current (30-Sep-20 ) |
Previous (24-Apr-20 ) |
|
| Action | Upgrade | Maintain |
| Long Term | A(f) | A-(f) |
| Short Term | - | - |
| Outlook | Stable | Stable |
| Rating Watch | Yes | - |
The rating captures the essence of change in the investment philosophy of the fund, as envisaged by the asset manager. The fund intends to invest in credit risk exposure of not less than "A+" (Single A Plus). The credit quality is expected to remain strong. Investment in these securities would also improve the liquidity profile of the fund, given relative ease in transactions. At end Jun'20, ~64.63% of fund's assets are invested in T-Bills, ~24.03% holding is maintained in Sukuk/TFCs, whereas ~1.22% and ~8.19% of assets were placed in cash at bank and CP respectively. The aggressive mandate of the fund allows the management to take such positions in the Fixed Income market, but the high duration decreases the NAV stability. The unit holding pattern of the fund reflects high concentration risk as top 10 investors represent ~97.8% of the fund's assets.
Going forward, the fund intends to maintain its exposure in government securities and maintain/increase allocation towards Sukuk/TFCs, given the avenues available for investing. Material changes in the fund's asset allocation strategy, impacting its credit quality and/or exposure to interest rate risk, would affect its rating. There is a single investment below A rating category, which the fund intends to replace with higher ratings. Hence, the Rating Watch is assigned.
About
the Entity
AKD Investment Management Limited commenced its operations in September 2004. The Company is registered as an Asset Management Company under the Non-Banking Finance Companies Rules, 2003. The Company is sponsored by Aqeel Karim Dhedhi Securities (Pvt) Limited (99.97% ownership). Aqeel Karim Dhedhi Securities (Pvt) Limited is majority-owned by Mr. Aqeel Karim Dhedhi, Chairman of the AKD Group, a renowned figure in Pakistan's capital markets.
The Board of Directors of the Company comprises seven members, including the CEO Mr. Imran Motiwala, who has been serving as the Chief Executive Officer of AKD Investment Management Limited since 2009. The Company is currently managing seven open-end funds with assets under management of ~PKR 4.6bln at end Jun'20.