Lahore: The Pakistan Credit Rating Agency Limited (PACRA) has maintained the stability rating of Alhamra Government Securities Fund, a medium-risk Islamic Income Scheme. The Fund's objective is to optimize returns by investing primarily in Shariah-compliant government securities, Islamic banks, and Islamic banking windows of conventional banks. Recent data indicates a contraction in the Fund's Assets Under Management, which stood at PKR 442 million as of March 26, compared to PKR 761 million in September of the previous year, reflecting changing investor preferences and market conditions.

According to PACRA, the Fund's asset allocation remains concentrated, with approximately 86% of the portfolio invested in GoP Ijarah Sukuks, while around 7% is held in cash and cash equivalents, and the remaining 7% in other receivables. The Fund's strategy of focusing on sovereign-backed Shariah-compliant instruments provides a strong foundation in terms of credit quality, with 88% of its assets in AAA-rated instruments.

Despite the Fund's medium-risk classification, its credit profile remains robust due to its significant exposure to highly-rated sovereign-backed instruments. The weighted average maturity of the portfolio is 730 days as of March 26, indicating high sensitivity to changes in profit rates and market valuations. This elevated maturity profile, primarily driven by longer-tenor GoP Ijarah Sukuks, may result in mark-to-market volatility but also offers potential benefits from favorable movements in profit rates.

The Fund reported a 365-day return of 8.90% as of March 26, slightly underperforming its benchmark return of 10.18%. This underperformance is attributed to valuation adjustments linked to longer-duration sovereign instruments amid evolving market yield dynamics. The Fund's investment strategy remains aligned with its mandate, emphasizing high-quality sovereign Islamic securities. Future changes in investment policy or compliance with rating criteria may impact the assigned rating.