The Pakistan Credit Rating Agency Limited
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Ayesha Qasim

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PACRA Maintains Stability Rating of JS Islamic Income Fund

Rating Type Stability Rating
(02-May-19 )
(06-Dec-18 )
Action Maintain Maintain
Long Term AA-(f) AA-(f)
Short Term - -
Outlook Stable Stable
Rating Watch - -

The objective of JS Islamic Income Fund (JSIIF) is to generate stable returns and ensure capital preservation over medium to long term, by investing primarily in quality Sukuks, Shariah-compliant Government Securities, Shariah-compliant Bank Deposits and other Shariah-compliant debt instruments.
At end Dec-18, fund's exposure with Sukuks was 68% having credit ratings of AAA (~10%), AA (~32%) and A (~26%) . ~30% of the assets of the portfolio were invested as cash balances in banks rated A and above. Weighted average maturity of the fund was ~2.8 years. The unit holding pattern of the fund is highly concentrated with top ten investors representing 91% of the fund's assets, (out of which ~8% are owned investments) which exposes the fund to a high level of redemption pressure.

Going forward, the fund intends to maintain exposure towards debt instruments and cash balances. Material changes in the fund's asset allocation strategy, which could negatively impact the fund's credit quality and exposure to interest rate risk, remains critical for the rating. PACRA would monitor performance against agreed parameters on monthly average basis.

About the Entity
JS Investments Limited was incorporated in 1995 and listed on the Pakistan Stock Exchange since April 24, 2007. It is one of the oldest private sector asset management company in Pakistan and rated AM2. JS Bank Limited owns ~65% of JS Investments Limited. JS Bank Limited carries a long-term rating of 'AA-' and short-term rating of 'A1+' by PACRA. JS investments has a diversified fund slate consisting of eleven open-end funds and two voluntary pension funds. The AUMs were ~PKR 19.9bln at end Mar-19.

The board of JS Investment Limited comprises eight members including the Chief Executive Officer. The board has one independent director, four sponsor representatives and two group representatives. The Chairman Mr. Basir Shamsie is a part of the JS Group since 1994 and is the Chairman of JS Investments Limited since 2016. The CEO, Mr. Hasnain Raza Nensey has profound experience in the financial industry.

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.