The Pakistan Credit Rating Agency Limited
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Muhammad Junaid

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PACRA Maintains Stability Rating of NIT Government Bond Fund

Rating Type Stability Rating
(10-Sep-21 )
(10-Mar-21 )
Action Maintain Maintain
Long Term AA(f) AA(f)
Short Term - -
Outlook Stable Stable
Rating Watch - -

NIT Government Bond Fund (or the 'Fund') is a low-risk profile fund. NIT Government Bond Fund aims to invest primarily in Government Securities. In line with its stated investment policy, the fund shall invest at least 70% of net assets in securities issued by GOP and reverse repo in securities issued by GOP. It will also place Fund's allocations with banks having investment-grade ratings & above. The weighted average time to maturity of the Fund shall not exceed 7.5 years. The assigned rating reflects adequate strength of the Fund's credit and interest rate risk profile. At the end-Jun'21, most of the government securities were redeemed and the amount has to be invested in banks which has raised the exposure in banks to 64% while it reduced the exposure the government securities to 36%. In later months, the exposure in government securities was in compliance with the investment policy. At the end-Jun'21, ~36% of the Fund's assets were invested in Government Securities, whereas ~64% of the exposure was maintained in banks rated ‘AA’- or above. The duration of the Fund at the end Jun'21 stood at ~101 days, which has improved since the last review. The standard deviation of the returns of the Fund is 0.46% since inception, which means that the fund has been consistently able to maintain its returns. This has resulted in a perfect coefficient of variation. The unit holding pattern of the Fund is highly concentrated with the top ten investors representing ~82% of the fund's assets, out of which ~48% are owned investments which provide a cushion against the redemption pressure.
Going forward, the Fund intends to shift its assets to remain in government securities specifically floating rate PIBs. 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
National Investment Trust Limited was established in 1962 and is a pioneer in the mutual fund industry. The Company’s Board of Directors currently comprises ten board members out of which nine are non-executive. Mr. Adnan Afridi, CEO/MD who joined in Feb'19 holds profound experience in the financial services and capital markets. Mr. Manzoor Ahmed is the COO and has a successful track record of managing the operations and investment portfolio of the Company. The Company is currently one of the largest asset management companies in Pakistan with a portfolio of twelve open-end funds which includes two non-public funds namely NIT-SEF and NIT-EMOF, two voluntary pension schemes, and an exchange-traded fund. The assets under management of the Company stood at ~PKR 99,986mln (including SEF & EMOF) end-Jun'21.

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.