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The Pakistan Credit Rating Agency Limited

Date
12-Jul-2017
Analysts
Rai Umar Zafar
rai.umar@pacra.com

Mohsin Naseer
mohsin.naseer@pacra.com

+92-42-35869504
www.pacra.com
Applicable Criteria

  • Methodology | Fund Stability Rating (Jun 17)

Related Research

  • Sector Study | Mutual Funds (Oct 16)
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PACRA Maintains Stability Rating of Alfalah GHP Islamic Income Fund
 Rating Type Stability Rating
Current
(12-Jul-2017)
Previous
(09-Dec-2016)
 Action Maintain Maintain
 Long Term A+(f) A+(f)
 Short Term - -
 Outlook Stable Stable
 Rating Watch - -

The investment objective of the fund is to provide investors with reasonable rate of return along with long term capital appreciation by investing in a diversified portfolio of Shariah compliant investment instruments.

The rating reflects fund's strong credit quality and strong liquidity profile emanating from its 78% exposure as cash. The remaining 21% assets of the fund were invested in good quality corporate sukuks having rating of 'AA-' and above at end-May-17. Meanwhile, the rating incorporates the fund's low exposure to interest rate volatility. The unit holding pattern of the fund is highly concentrated with top10 investors representing 99% of the fund, which represents redemption risk.

Going forward, the management intends to maintain the current investment strategy. Material changes in the fund's asset allocation strategy, which could negatively impact the fund's credit quality and exposure to interest rate risk, remain critical for the rating.
About the Entity
Commencing operations in Mar 05, Alfalah GHP Investment Management Limited (AGIML) is 82% owned by Abu Dhabi Group, including 40% through Bank Alfalah Limited (BAFL) and 42% through MAB Investments Inc. Meanwhile, GHP Arbitrium Holdings Limited (GHP) owns 14% stake. BAFL is the sixth largest commercial bank of the country with a branch network of over 500 branches. AGIML is currently managing sixteen open-end funds with cumulative assets under management of PKR 36bln at end-Mar17.

The company's six member BoD comprises CEO, two representatives of BAFL, one representative of GHP Arbitrium Holdings Limited, one representative of MAB Investments and one independent director. The board is chaired by Mr. Ali Sultan, Group Head - Treasury, Investments & Financial Institutions, Bank Alfalah Limited. The CEO of AGIML, Ms. Maheen Rahman, has over 17 years of rich local and international experience in the financial services. She is assisted by an able team.
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.