Analyst
Shahzaib Khalid
shahzaib.khalid@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
Related Research
PACRA Downgrade Stability Rating of Pakistan Cash Management Fund
Rating Type | Stability Rating | |
Current (30-Jun-18 ) |
Previous (12-Jul-17 ) |
|
Action | Downgrade | Maintain |
Long Term | AA+(f) | AAA(f) |
Short Term | - | - |
Outlook | Stable | Stable |
Rating Watch | - | - |
The fund's mandate is to generate optimal returns by investing primarily in shorter duration money market instruments.
The rating reflects the strength of the fund's credit and interest risk profile. The fund's good credit quality and sound liquidity profile emanates primarily from its mandate to invest in government securities; mainly Treasury Bills. At the same time, the fund adheres to very conservative duration limit, ensuring low exposure to interest rate risk. At end-Dec17, the fund is invested in T-bills (49%), while the remaining assets are held as cash (51%) in scheduled banks with strong credit quality – AA+ and above. Average duration of the fund and exposure in government securities remained in line with assigned parameters. The unit holding pattern of the fund has moderate concentration with top10 investors representing 67% of the net assets which exposes the fund to moderate redemption pressure.
Going forward, the management of the fund intends to maintain exposure towards cash balances and govt-securities. PACRA would monitor compliance against agreed parameters on monthly average basis.
About
the Entity
MCB Arif Habib Savings & Investments Limited (MCBAH) incorporated in August 2000 and listed on the Karachi Stock Exchange, is a major player in the mutual fund industry of Pakistan. During Jun11, MCB Asset Management Company was merged into Arif Habib Investments. The objective was to achieve synergies in the asset management business and access a wider distribution network.
Company’s eight members BoD, two representatives from MCB, two representatives from Arif Habib Group, CEO and three are independent. Mian Muhammad Mansha, Chairman MCB, serves as the Chairman on the board. Mr. Saqib Saleem is the CEO, having working experience of over thirteen years. With overall assets under management of ~ PKR 53 billion, the company is currently managing sixteen open-end funds and two voluntary pension funds.