Karachi: The Pakistan Credit Rating Agency Limited (PACRA) has reaffirmed the stability rating of the Faysal Income and Growth Fund (FIGF) at ‘A(f)’ with a stable outlook, as of October 22, 2024. The maintenance of this rating reflects the fund’s consistent performance and strategic asset allocation aimed at providing investors with optimal yields through a blend of long-term and short-term investments.
According to The Pakistan Credit Rating Agency Limited, the FIGF operates with a moderate risk profile, focusing on diversifying its portfolio across different asset classes. As of the end of June 2024, the fund had a significant allocation of its investments in AA- rated instruments (67.58%), followed by AAA rated avenues (22.56%), and a smaller portion in A+ rated instruments (4.51%).
The majority of the fund’s assets were held in cash and bank placements, comprising about 68.15% of its portfolio, which underscores its liquidity strategy. This is complemented by investments in Treasury Bills and Term Finance Certificates/Sukuks, which account for 8.02% and 4.57% of the portfolio, respectively.
The Weighted Average Maturity (WAM) of the fund was reported at 54 days as of June 2024, which PACRA notes as a strategic positioning to minimize the fund’s exposure to credit risk. Meanwhile, a duration of 46 days indicates the fund’s measured exposure to interest rate fluctuations, balancing risk and return effectively.
However, the fund faces significant redemption pressure, with the top ten investors accounting for about 91.2% of the fund’s total assets. This concentration heightens the fund’s vulnerability to large withdrawals. In response, the fund has prioritized maintaining sufficient liquidity levels to manage potential redemption demands without disrupting its operations or compromising its investment objectives.
PACRA has indicated that any significant changes in FIGF’s investment policy or adjustments in the rating criteria could influence future ratings. The ongoing ‘A(f)’ rating demonstrates the agency’s confidence in the fund’s ability to sustain its strategic goals while continuing to offer stable and competitive returns to its investors.