Karachi: The Pakistan Credit Rating Agency Limited (PACRA) has reaffirmed the stability rating of the JS Islamic Income Fund (JS IIF) at ‘AA-(f)’ with a stable outlook, as of October 22, 2024. This rating confirmation reflects the fund’s consistent performance and strategic adherence to Shariah-compliant investment avenues, aimed at stable returns and capital preservation over the medium to long term.
According to The Pakistan Credit Rating Agency Limited, the JS Islamic Income Fund maintains a medium risk profile, primarily investing in a mix of high-quality Sukuks, Shariah-compliant government securities, Shariah-compliant bank deposits, and other Shariah-compliant debt instruments. The fund’s investment strategy is designed to balance risk and return effectively, ensuring investor confidence in its financial health and operational management.
As of the end of June 2024, the fund’s allocation included approximately 43.3% of its net assets in cash balances with banks, ensuring substantial liquidity. The Sukuk portfolio comprised about 31.6% in corporate sukuk and 21.4% in Government of Pakistan Ijara Sukuks. The remainder of the portfolio, about 3.7%, was invested in other Shariah-compliant avenues.
The credit quality of the fund’s investments is robust, with 31.1% rated A+, 24.7% rated AA, 21.4% rated AAA, 10.8% rated AA-, and 8.3% rated AA+. The Weighted Average Maturity (WAM) of the fund was reported at 628 days, indicating a very high level of credit risk, while the duration of 58 days suggests limited exposure to interest rate fluctuations.
However, the fund faces significant redemption pressure, with approximately 70.26% of its assets concentrated among the top ten investors as of June 2024. This high concentration highlights the potential for substantial withdrawals, which the fund manages by maintaining adequate liquidity levels to meet such demands.
PACRA has noted that any material changes in the fund’s investment policy or adjustments in the rating criteria could influence future stability ratings. The continued ‘AA-(f)’ rating is a testament to the fund’s ability to manage risks while providing stable and compliant financial returns to its investors.