The Pakistan Credit Rating Agency Limited
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Muhammad Junaid

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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 - -

NIT Income Fund (or the 'Fund') is a medium-risk profile fund. The assigned rating reflects its competitive stream of returns with a moderate level of risk. As per the investment policy, 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 capped at 4 years with an exception to securities issued by GOP. The rating reflects the moderate strength of the Fund's credit and interest rate risk profile. At the end Jun'21, ~32% of the Fund's assets were invested in a single bank rated AA+, this would create concentration risk. Whereas, ~11% of funds were invested in A- or above rated TFCs of the financial institutions . The fund also had an exposure of ~13% of gross assets in comparatively risky avenues such as corporate sukuk. The duration of the Fund stood at ~59 days which provides it the flexibility to deal with interest rate risk. The unit holding pattern of the Fund is highly concentrated with the top ten investors representing ~85% of the fund's assets, out of which ~62% are owned investments which provide a cushion against the redemption pressure.
Going forward, based on market expectations the Fund may shift its assets towards floating rate and short tenor instruments as the SBP is expected to smoothly increase the policy rate. 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 and is a pioneer in the 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. The Company is currently one of the largest asset management companies 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 99,986mln (including SEF & EMOF) end-Jun'21.

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.