Muhammad Zain Ayaz
PACRA Upgrades Stability Rating of First Habib Income Fund
|Rating Type||Stability Rating|
The rating of First Habib Income Fund (or the "Fund") reflects the funds medium risk profile and also captures the objective of the Fund to provide reasonable rate of return consistent with reasonable concern for safety of principal amount to the Unit Holders. During 6MCY20, the asset allocation of the fund ~75% remained in AAA rated banks/Govt. Securities, which reduced the credit risk exposure of the fund. However, there has been concentration in single bank deposit which would be diversified, going forward. The investment policy of the Fund strictly prohibits the investment in below A rated avenues. The fund has high concentrated unit holding pattern, with top 10 investors representing ~87% of the fund size at end Dec’20. The WAM of the fund increased to ~553 days at Dec'20 (Jun'20: ~438 days) and the duration of the investments is 40 days at Dec'20 which also bodes well for the rating.
Going forward, the management intends to shift funds allocation towards PIBs and T-Bills and in 'AA' and above rated Banks. Shifting more assets to longer term securities may expose the Fund to interest rate sensitivity. The management further apprised on the diversification of assets allocation in banks to reduce the concentration risk. Theses material changes in the fund's asset allocation strategy, have positive impact on the fund's credit quality and would remain important for the rating.
AL Habib Asset Management Limited incorporated in September 2005 as an unlisted public company, is one of the growing Asset Management and Investment Advisory Company in Pakistan. The company is licensed by the Securities and Exchange Commission of Pakistan (SECP) to carry out these services under the Non-Banking Finance Companies Regulations. The Company is a wholly owned subsidiary of Bank AL Habib Limited.
The Board of Directors comprises six members. The CEO, Mr. Kashif Rafi, has vast experience expanding over 20 years in the field of Investments and Fund Management. The Company’s diverse product slate includes 4 conventional funds and 2 shariah compliant funds.