Islamabad: The Pakistan Credit Rating Agency Limited (PACRA) has reaffirmed the A+(f) stability rating of the AWT Income Fund, maintaining a stable outlook. The fund, characterized by a medium risk profile, aims to deliver competitive returns through investments in a range of short to long-term debt instruments and securities.

According to The Pakistan Credit Rating Agency Limited, the AWT Income Fund has effectively managed its portfolio to maintain a strong credit position. Approximately 65.6% of the fund’s investments are in government or AAA-rated securities, with 22.7% in A+ and 8.8% in AA-rated avenues. The asset allocation includes about 37.25% in Pakistan Investment Bonds (PIBs), 24.52% in bank placements and cash, and smaller proportions in Treasury Bills and various Sukuks.

Despite a robust credit profile, the fund’s duration of 348 days as of the end of June 2024 subjects it to high interest rate risk, while the Weighted Average Maturity (WAM) of 1,027 days indicates a very high credit risk exposure. Nonetheless, the substantial investment in government securities provides a buffer against potential credit downturns.

A significant challenge identified in the report is the concentration of investments, with the top ten investors accounting for about 51.25% of the fund’s assets, which poses a high level of redemption pressure. PACRA has noted that any substantial changes in the fund’s investment strategy or adjustments in the rating criteria could potentially impact future ratings.