Draft PR
The Pakistan Credit Rating Agency Limited

Rai Umar Zafar

Applicable Criteria

  • Methodology | Fund Stability Rating (Jun 17)

Related Research

  • Sector Study | Mutual Funds (Oct 16)
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PACRA assigns Stability Rating of Dawood Income Fund
 Rating Type Stability Rating
 Action Initial
 Long Term AA-(f)
 Short Term -
 Outlook Stable
 Rating Watch -

The investment objective of the fund is to provide a return greater than that offered by other investments of similar risk profile through investments in a portfolio of money market instruments

The rating reflects the intended low-risk strategy, current sound credit quality and liquidity profile of the fund. At Nov-17, the fund is majorly invested in bank placements (i.e. 89%). The remaining assets were exposed in good quality TFC/Sukuk ~11%. The fund has 32% expsure in AA- rated instruments and 67% exposure in A+ rated instruments. The unit holding pattern of the fund shows concentration as top10 investors represents 89% of fund assets. However, the comfort can be drawn from ~50% exposure of group companies

Going forward, the fund plans to re-profile its asset mix through exposure in Government Securities up to 50%. The fund plans to maintain 10-15% exposure in A+ rated Debt Instruments and remaining assets in AA- and above rated bank’s placements. 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
786 Investments Limited (formerly: Dawood Capital Management Limited) , a First Dawood Group (FDG) company, started asset management business in 2003. Majority holding in DCM is held by FDG (40%) through group companies (28%) and family members (12%). The other major shareholder is Bank of Khyber [BoK] (15%). DCM has three funds under management - Dawood Income Fund, Dawood Islamic Fund & First Dawood Mutual Fund. The company had Assets Under Management (AUMs) of around ~PKR 651mln at end-Nov 17. The Fund Manager, Mr. Muhammad Aslam, holds 30 years of experience in domestic capital markets.

The Board of DCM comprises six members including the CEO. Presently, one member represents FDG having executive position in a group company, one nominee comes from NIT and BoK each along with the presence of two independent directors on the Board. The Chairperson of the board is the President of First Women Bank Limited. The CEO, Ms Tara Uzra, a Harvard Law Graduate, has extensive experience in domestic capital markets. He is supported by the talented management staff
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.