Islamabad: The Pakistan Credit Rating Agency Limited (PACRA) has reaffirmed the AA+(f) stability rating of the AWT Money Market Fund with a stable outlook, indicating robust financial health and risk management despite potential high redemption pressures. The fund, recognized for its low-risk profile, focuses on generating competitive returns from short-term government securities and other SECP-approved debt instruments.

According to The Pakistan Credit Rating Agency Limited, the AWT Money Market Fund’s investment strategy is geared towards maintaining a balance between safety and yield, with a significant proportion of its portfolio in high-credit-quality instruments. As of the end of June 2024, about 73.05% of the fund’s assets were invested in AAA or government securities, with 12.56% in AA-rated securities, and 11.87% in A1-rated avenues.

The fund’s asset allocation strategy includes 49.48% in treasury bills, 23.26% in Pakistan Investment Bonds (PIBs), and 17.81% in short-term sukuk, among other investments. This diversified investment approach helps mitigate the inherent risks associated with money market funds, particularly interest rate fluctuations, as indicated by the fund’s duration of 71 days and a Weighted Average Maturity (WAM) of 76 days.

Despite the healthy diversification and liquidity of the portfolio, the fund faces a very high redemption pressure with 99.47% of the fund’s assets held by the top ten investors. This concentration of holdings could pose challenges; however, the fund’s management asserts that the risk is manageable given the sufficient liquidity levels to meet potential withdrawals.

PACRA notes that any future shifts in the fund’s investment policy or deviations from the current rating criteria could impact the stability rating.