The Pakistan Credit Rating Agency Limited
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Afnan Iqbal

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PACRA Maintains Stability Rating of NIT Income Fund

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

To generate a competitive stream of returns with moderate level of risk, the fund intends to invest primarily in fixed income avenues. As per the investment policy statement, the fund shall keep at least 25% of assets in cash or near cash instruments, which enhances the liquidity profile. The weighted average to maturity of net assets is caped at 4 years with an exception to securities issued by GoP. There is no restriction regarding time to maturity and duration of single asset in the portfolio. The rating reflects the moderate strength of the fund's credit and interest rate risk profile. At end Dec'20, ~32% of fund's assets were invested in PIBs (3 Years, 5 Years and 10 Years) out of which ~8% are floating rate, whereas ~23% of funds were invested with banks rated 'AA-' and above. The fund also had an exposure of ~25% in TFCs/Sukuks primarily rated 'AA' and above. Duration of the fund stood at ~234 days which may expose it to interest rate risk. The unit holding pattern of the fund is highly concentrated with top ten investors representing ~84% of the fund's assets, (out of which ~60% are owned investments) which exposes the fund to low level of redemption pressure.
Going forward, based on market expectations the plan may shift its assets towards floating rate and short tenor instruments. 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
National Investment Trust Limited was established in 1962 as an unquoted public limited company and pioneer of domestic mutual fund industry. The Company’s Board of Directors currently comprises ten board members out of which nine are non-executive. Mr. Adnan Afridi, CEO/MD who joined in Feb'19 holds profound experience in the financial services and capital markets. Mr. Manzoor Ahmed is the COO and has a successful track record of managing the operations and investment portfolio of the Company. They are supported by a team of qualified and experienced professionals.

The Company is currently one of the largest asset management company in Pakistan with a portfolio of twelve open-end funds which includes two non-public funds namely NIT-SEF and NIT-EMOF, two voluntary pension schemes and an exchange traded fund. The assets under management of the Company stood at ~PKR 94,578mln (including SEF & EMOF) 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.