Karachi: VIS Credit Rating Company Limited has reaffirmed the fund stability rating of the Meezan Islamic Income Fund (MIIF) at 'A+(f)' (Single A Plus (f)). The rating reflects a moderate degree of stability in the fund's Net Asset Value, with potential risk factors subject to economic changes.

According to VIS Credit Rating Company Limited, the Meezan Islamic Income Fund, an open-end Shariah-compliant income fund managed by Al-Meezan Investment Management Limited, was launched in January 2007. The fund aims to provide high and stable returns while preserving capital through investments in Shariah-compliant assets. It also seeks opportunities for capital appreciation.

The reaffirmed rating is attributed to the fund's adherence to its asset allocation strategy, as outlined in its offering document. During the fiscal year 2024, approximately half of the fund's portfolio consisted of Shariah-compliant government-backed securities, with the remaining investments in cash and Sukuks. The rating also considers the fund's credit quality, with the majority of investments in government securities and AAA-rated assets, followed by A-rated instruments. However, the Sukuk portfolio's credit quality has been affected by non-performing exposures totaling about Rs. 412 million, for which 70% provisioning has been made. No provision has been made against non-performing investments in Agha Steel and Shakarganj Food's Sukuk, which form around 7% of the total portfolio.

The fund's weighted average time to maturity has generally remained within prescribed limits, except for one specific month. The fund's liquidity profile is deemed sound, given the liquid assets it holds. The fund's assets under management are primarily dominated by retail investors, with low client concentration risk. In terms of performance, the fund has exceeded its benchmarks, though it ranks in the third quartile relative to its peers.