The Pakistan Credit Rating Agency Limited
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Afnan Iqbal

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PACRA Maintains Stability Rating of Lakson Income Fund

Rating Type Stability Rating
Action Maintain Maintain
Long Term A+(f) A+(f)
Short Term - -
Outlook Stable Stable
Rating Watch - -

The rating reflects moderate strength of the fund's credit and interest rate risk profile. The fund utilizes a top down process with active sector rotation, duration and yield curve management. At end Dec'20, ~11% of fund's assets were invested in PIB's, ~43% of funds were deposited with banks (~19% with commercial bank rated 'AAA' & ~23% with microfinance banks rated 'A'). The fund also had an exposure of ~11% in corporate TFC's, Sukuks and commercial papers, primarily rated 'AA' and above. Average duration of the fund in the last four quarters remained high at (424 days), exposing it to interest rate risk. Considerable holding of cash and near to cash instruments enhances the liquidity profile of the fund. The unit holding pattern of the fund is highly concentrated with top ten investors representing ~82% of the fund's assets, which may expose the fund to redemption pressure.
Going forward, based on market expectations the fund may reduce its exposure on PIB's thereby increasing the bank deposits. Material changes in the fund's asset allocation strategy, impacting its credit quality and/or exposure to interest rate risk, would affect the rating.

About the Entity
Lakson Investments Limited, the investment management company of the Lakson Group, was incorporated on January 02, 2009 as an un-listed public company. It is licensed to undertake Asset Management and Investment Advisory services. Lakson Investments is the only AMC, which offers exposure to international markets through Lakson Asset Allocation Developed Markets Fund. The Company is also managing a private equity and a venture capital fund along with conventional mutual funds and SMA products.

The company’s control vests in eight-member board, comprising four non-executives, one executive and three independent directors. The Chairman of the Lakson Group, Mr. Iqbal Ali Lakhani, is the chairman of Lakson Investment’s board. The Company is managing six open-end funds under five different categories with an aggregate AUM base of ~PKR 21,926mln at end-Dec'20.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.