Karachi: VIS Credit Rating Company Limited (VIS) has assigned an initial Fund Stability Rating (FSR) of ‘AA(f)’ to Faysal Islamic Sovereign Plan-II (FISP-II), indicating a high degree of stability in its Net Asset Value with modest risk factors that may fluctuate due to economic changes.

According to VIS Credit Rating Company Limited, the ‘AA(f)’ rating reflects a strong stability metric for FISP-II, established in January 2024 with a strategic aim to deliver competitive returns while maintaining low risk through investments in Shariah-compliant government securities and Islamic financial institutions. The fund peaked in its assets under management in February 2024, though it saw a decline through to June 2024.

The portfolio of FISP-II primarily includes significant holdings in Ijarah Sukuk and other Shariah-compliant placements with banks, development financial institutions, and various receivables. The investments strictly adhere to those rated ‘AA-‘ and above, aligning with the fund’s mandate. The evaluation also considers the fund’s market and liquidity risk profile, noting that the weighted average time to maturity and the modified duration both remain within the limits set by its investment policy.

Furthermore, the fund benefits from a low concentration risk, with a diversified investor base primarily composed of retail clients. The top ten investors represent 38.1% of the total plan assets, supporting a balanced risk distribution. Despite its recent underperformance relative to its benchmark rate, the overall risk of redemption is viewed as manageable due to the liquid nature of the fund’s investments.