PACRA Assigns Initial Stability Rating to Faysal Islamic Financial Growth Fund-II

Faysal Islamic Financial Growth Fund-II (“FIFGF II” or “the Fund”) or is a medium risk profile Fund. The investment objective of the fund is to aim to generate Competitive and consistent returns while seeking capital growth through a diversified portfolio of shariah compliant debt securities, liquid money market instruments and placements. As of Aug'26, the Fund's Assets Under Management (AUM) stood at ~PKR 36.049bln, up significantly from PKR 10.70bln as of Dec'25, reflecting more than a threefold increase over the period, while the underlying investment strategy remained broadly unchanged. Asset allocation as of Aug'26 was concentrated in cash (78.88%) and placements with banks, NBFCs, and DFIs (8.35%), supplemented by Ijarah Sukuk (4.10%) and short-term Sukuk (8.18%), with the residual allocated to other instruments including receivables (0.5%). The composition reflects a book weighted toward liquid, short-tenor instruments rather than term credit exposure. From a credit quality perspective, Government Securities (4.1%) and AAA-rated exposures (13.08%) together constituted around a sixth of the portfolio, while AA+ (8.35%) and AA (65.8%) accounted for the majority of the remaining portfolio, followed by A1+ (0.93%), short-term A1 exposures (7.21%), and other receivables (0.5%). The Offering Document permits investment across a broader credit spectrum, including A- rated avenues. Management clarified that the limited A- exposure during the period was incidental to the daily product account and stated that, going forward, its internal strategy is to build no fresh exposure below AA-. This remains an internal strategy rather than a binding covenant and will be assessed against subsequent portfolio behaviour. As of Aug'26, the Fund's WAM stood at ~26 days, while modified duration was ~26 days, keeping interest rate and reinvestment exposure narrow but limiting yield pickup. Unit holding remained materially concentrated, with the top ten investors accounting for ~43% of total holdings, exposing the Fund to redemption pressure; its short WAM and high allocation to cash and bank placements provide a partial offset. On performance, the Fund generated an annualized return of 10.69% against a benchmark return of 10.40% and peer average of 9.85% for Aug'26, outperforming the benchmark by ~29bps and peers by ~84bps, over a track record of less than one year.
Going forward, the assigned rating will remain contingent upon management's ability to maintain the Fund's portfolio within the stipulated credit quality thresholds and the approved investment mandate, while effectively managing liquidity, duration, counterparty, and investor concentration risks. Continued adherence to the targeted asset allocation, preservation of the intended credit profile, and sustained compliance with the Fund's investment strategy will remain key considerations in the ongoing assessment of the assigned rating.

About the Entity
Faysal Funds (Faysal Asset Management Limited) is a subsidiary of Faysal Bank Limited (FBL), which holds 99.99% of its shares. Incorporated in Pakistan on August 6, 2003, as an unlisted public limited company, Faysal Funds is licensed by SECP to undertake asset management, investment advisory, REIT management, and Private Equity, Pension Fund Management Services, and Venture Capital activities. The Board comprises seven members, including Mr. Yousaf Hussain, who has over 32 years of professional experience, primarily with ABN AMRO Bank and Faysal Bank. Mr. Nadir Rahman, Director and CEO, brings over 36 years of capital markets experience, including 28 years in C-suite and board-level positions. AUM as of Aug '26 stood at ~PKR 279.211bln.