PACRA Maintains Stability Rating of Alfalah Financial Sector Income Fund

Alfalah Financial Sector Income Fund (“A-FSIF” or “the Fund”) operates with a medium risk profile, aligned with its objective of income enhancement alongside capital preservation through diversified investment plans. The Fund primarily invests in prime-quality financial sector instruments, including TFCs/Sukuks, bank deposits, spread transactions, and short-term money market instruments, in accordance with its authorized investment universe and risk parameters. As of September 2025, the Fund reported an AUM of PKR 14,418 million, reflecting its established position within the income fund segment. In terms of asset allocation, the Fund maintained a highly conservative stance, with approximately 81% of assets placed in cash, ~11% invested in Pakistan Investment Bonds (PIBs), ~6% in Treasury Bills, ~1% in TFCs/Sukuks, and the remaining ~2% in other approved avenues. This allocation underscores the Fund’s strong preference for liquidity and capital protection, while retaining selective exposure to income-generating instruments. From a credit quality perspective, the portfolio comprised approximately ~67% invested in A rated instruments, ~31% in A- rated avenues, ~0.04% in A+ rated instruments, with the remaining ~2% allocated to other exposures. Overall, the credit profile remains commensurate with the Fund’s medium-risk positioning and its focus on financial sector counterparties. At end-Sep’25, the Fund’s Weighted Average Maturity (WAM) stood at 66 days, exposing the Fund to low levels of interest rate and credit risk. The short maturity profile reflects a prudent and defensive investment strategy, supporting liquidity management and limiting valuation volatility. The unit holding pattern remained moderately concentrated, with the top 10 investors accounting for approximately 58% of total units as of end-September 2025. While this concentration exposes the Fund to moderate redemption pressure, the associated liquidity risk is significantly mitigated by the Fund’s substantial cash holdings (approximately 81% of the portfolio), enabling the Fund to comfortably meet redemptions without resorting to distressed asset sales.
Going forward, any material changes in the investment policy or the devised rating criteria for the assigned rating would have an impact on the rating.

About the Entity
Alfalah Asset Management Limited was incorporated on October 18, 2004 as an unlisted public limited company and is licensed by the Securities and Exchange Commission of Pakistan to manage open-ended mutual funds and offer investment advisory services. The Company was established as joint venture Non-Banking Finance Company by Bank Alfalah Limited and GHP Arbitrium. The Company provides a wide range of mutual funds and pension funds both in conventional and Shariah compliant category. The Company also provides investment advisory services to HNW individuals and corporate clients. The Company’s board of directors comprises eight members including the Chairman (Mr. Atif Aslam Bajwa) and the Chief Executive Officer (Mr. Khaldoon Bin Latif). The board is dominated by representatives of MAB Investments and Bank Alfalah Limited. The board has two independent and five non-executive directors. The board members possess strong profile and skills suited to the financial services industry. Assets under management of the Company stood at ~PKR 320bln at end Sep'25.