The Pakistan Credit Rating Agency Limited
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Afnan Iqbal

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PACRA Maintains Stability Rating of Alfalah GHP Sovereign Fund

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

The rating reflects adequate strength of the fund's credit and interest rate risk profile. At end Jun'20, ~59.5% of fund's assets were invested in T-Bills, ~15% of funds were placed with bank rated 'AA+', ~1% of funds were invested in Sukuks/TFCs. The fund also had an exposure of ~18% in GoP Ijara Sukuk - 5 Years. Duration of the fund remained high at and Jun'20 (209 days), exposing the fund to interest rate risk, however comfort can be drawn due to sizeable investments in T-Bills which reduces the credit and liquidity risk. The unit holding pattern of the fund is moderately concentrated with top ten investors representing ~53% of the fund's assets, which exposes the fund to moderate level of redemption pressure.
Going forward, the fund intends to increase its exposure in PIB's as per the funds authorized allocation and market expectations. Material changes in the funds asset allocation strategy, impacting its credit quality and/or exposure to interest rate risk, would affect the rating.

About the Entity
Alfalah GHP Investment 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 and the Chief Executive Officer. 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 40,079mln at end Jun’20 and are spread across fourteen open-end mutual funds and two voluntary pension schemes.

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.