The Pakistan Credit Rating Agency Limited
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Shazia Afzal

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PACRA Maintains Stability Rating of NBP Money Market Fund

Rating Type Stability Rating
(16-Apr-21 )
(16-Oct-20 )
Action Maintain Maintain
Long Term AA(f) AA(f)
Short Term - -
Outlook Stable Stable
Rating Watch - -

The rating reflects the fund's low risk profile emanating from the fund's investment policy to invest in avenues rated 'AA' and above.The investment objective is to provide stable income stream with preservation of capital by investing in AA and above rated banks and money market instruments. As per the authorized investment policy, the fund may invest in government securities up-to 100% of the net assets with maximum maturity of 6-months and the policy also dictates a maximum 75% allocation in TDR with banks rated "AA" and above.The weighted average time to maturity of net assets shall not exceed 90 days.The performance benchmark of the Fund for the period of return shall be based on average 70% 3-Month PKRV & 30% average 3-Month deposit rates of three AA rated banks.At end Dec'20, asset allocation of the fund consisted of bank deposits ~100% and primarily rated 'AAA'. The fund's unit holding pattern is highly concentrated with the top 10 investors comprising ~59% of the fund's assets, which shows high redemption pressure over the fund.
Going forward, the fund intends to increase its exposure in T-Bills and money market. Any material changes in the fund's asset allocation strategy, impacting its credit quality and/or exposure to interest rate risk, would affect the rating.
Going forward, in accordance with the investment policy the fund may increase its exposure in T-Bills and invest the remaining assets with banks while keeping under consideration the market expectation. 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
NBP Fund Management Limited (or the "Company"), established in 2005, is licensed by Securities and Exchange Commission (SECP) to carry out asset management and investment advisory business. National Bank of Pakistan is the largest shareholder of the company with a stake of ~54%. In 2019, Baltoro Growth Fund has acquired the entire 36% stake of Alexandra Fund Management Private Limited in the Company. Baltoro Capital is a Pakistan focused private equity firm. Baltoro Capital has made investments in the pharmaceutical, renewable energy and financial services sectors in Pakistan. It is actively deploying its funds in businesses positioned to achieve extraordinary growth. The CEO of NBP Fund Management Limited, Dr. Amjad Waheed, CFA and family also holds a 10% stake in the company.

The Company’s nine-member Board of Directors includes three independent directors and the CEO. With overall assets under management of PKR 163,473mln at end-Dec'20, the Company is currently managing a diversified fund slate of twenty eight open-end mutual funds, two voluntary pension schemes and an Exchange Traded Fund.

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.