PACRA Upholds Stability Rating of 786 Smart Fund Amid Medium Risk Posture

Lahore, The Pakistan Credit Rating Agency Limited (PACRA) has sustained the stability rating of the 786 Smart Fund, an open-ended Shariah-compliant income category fund showcasing a medium risk profile. The Fund is committed to rendering competitive risk-adjusted returns to its investors by diversifying its portfolio into an array of long, medium, and short-term Shariah-compliant debt instruments, all the while heeding liquidity concerns. The rating conferred mirrors the Fund's moderate credit and interest rate risk, shaped by its investment strategies.

A breakdown as of June 2023 displays the Fund's allocation of ~88.1% to Sukuks and TFCs, subdivided into ~21% in GoP Ijarah Sukuk and a significant 67.1% in Corporate Sukuk. Notably, the investment in Corporate Sukuks leans heavily towards AA and higher-rated categories. The Fund's duration was pinned at 2 days as of June 2023, curtailing its susceptibility to interest rate fluctuations. This information was sourced from the Pakistan Credit Rating Agency Limited.

Meanwhile, a Weighted Average Maturity (WAM) of 595 days as of June 2023 hints at a pronounced credit risk, albeit rendered manageable given its major investments in long-term Sukuks, prominently the GoP Ijarah Sukuk accounting for ~21%. However, concentration of approximately ~88.59% of the Fund's assets among its top 10 investors as of June 2023 implies heightened redemption pressures. Conclusively, should there be any shifts in the Fund's asset allocation blueprint influencing its credit dynamics or interest rate risk exposure, it would be instrumental in recalibrating its rating.