Karachi: The Pakistan Credit Rating Agency Limited (PACRA) has announced that it is maintaining the stability rating of the NBP Islamic Income Fund (NIIF), a medium risk profile fund. The fund, designed to deliver competitive returns through investments in Shariah-compliant debt securities and money market instruments, experienced significant net outflows, with assets under management decreasing from PKR 13,489 million in June 2025 to PKR 9,364 million by December 2025. Despite these outflows, the fund continues to adhere to its investment strategy.
According to The Pakistan Credit Rating Agency Limited, the fund's current asset allocation strategy includes approximately 46.40% in cash holdings, 29.00% in Government of Pakistan Ijarah Sukuk, 11.30% in Term Finance Certificates/Sukuk, and 10.90% in Bai-Muajjal. The remaining portion is distributed among other instruments, including receivables. This allocation suggests a balance between liquidity and exposure to Shariah-compliant fixed income instruments.
In terms of credit quality, the fund has invested 37.40% of its portfolio in A+ rated avenues, 29.00% in government securities, 15.00% in AAA rated instruments, and 6.20% in A1+ rated avenues. The remaining portion is allocated across other categories, signifying moderate credit risk exposure with diversification across various rating categories. The fund's duration stood at 59 days by the end of December 2025, indicating low to moderate sensitivity to interest rate changes, while the weighted average maturity was 186 days, highlighting a balanced maturity profile.
The unit holding pattern of the fund remains diverse, with the top 10 investors holding only 2.94% of the units, indicating a very low concentration risk. However, the fund's performance showed a 12-month trailing return of 9.10% as of December 2025, which fell short of the benchmark return of 10.10%. This underperformance relative to the benchmark remains a point of concern.
Looking ahead, any significant changes in the investment policy or the criteria used for the rating could impact the stability rating of the NBP Islamic Income Fund.