The Pakistan Credit Rating Agency Limited
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Shazia Afzal

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PACRA Maintains Stability Rating of NBP Islamic Daily Dividend Fund

Rating Type Stability Rating
(16-Apr-21 )
(16-Oct-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, considerable holding of cash and bank balances reinforce the liquidity profile.The objective of NBP Islamic Daily Dividend Fund is to provide with daily dividend by investing in Shariah Compliant money market instruments.The Benchmark is 3-months average deposit rates of three (3) AA rated Islamic Banks or Islamic windows of Conventional Banks.The weighted average time to maturity of net assets shall not exceed 90 days. At end Dec'20, ~21% of fund's assets were placed with banks primarily rated 'AAA'and 'AA', while ~56% in bank deposits with ratings "AA" and higher. Remaining funds were allocated to Sukuk ~8% and commercial paper ~14% during the period. The unit holding pattern of the fund is highly concentrated with top ten investors representing ~82% of the fund's assets and hence exposed it with a high redemption pressure.
Going forward, in accordance with the investment policy of the fund and consider the market conditions, the Fund may change its exposure in CP and with banks. Material changes in the fund's asset allocation strategy, impacting its credit quality and/or exposure to interest rate risk, would affect the rating.

About the Entity
NBP Fund Management Limited (or the "Company"), established in 2005, is licensed by Securities and Exchange Commission (SECP) to carry out asset management and investment advisory business. National Bank of Pakistan is the largest shareholder of the company with a stake of ~54%. In 2019, Baltoro Growth Fund has acquired the entire 36% stake of Alexandra Fund Management Private Limited in the Company. Baltoro Capital is a Pakistan focused private equity firm. Baltoro Capital has made investments in the pharmaceutical, renewable energy and financial services sectors in Pakistan. It is actively deploying its funds in businesses positioned to achieve extraordinary growth. The CEO of NBP Fund Management Limited, Dr. Amjad Waheed, CFA and family also holds a 10% stake in the company.

The Company’s nine-member Board of Directors includes three independent directors and the CEO. With overall assets under management of PKR 163,473mln at end-Dec'20, the Company is currently managing a diversified fund slate of twenty eight open-end mutual funds, two voluntary pension schemes and an Exchange Traded Fund.

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.