JCR-VIS Credit Rating Company Ltd (JCR-VIS) has harmonised the Fund Stability Rating of UBL Islamic Savings Fund (UISF) at 'AA-(f)' (Double A Minus (f)). UBL Islamic Savings Fund is as an open-end Shari'ah-compliant income fund managed by UBL Fund Managers Limited (UBL Funds). As per the target asset allocation, 75 percent of net assets are proposed to be invested in government securities.
At end-December 2011, the fund had exposure in this avenue to the tune of 62 percent of net assets. Remaining assets west deployed in money market placements and held as cash. As the fund could earlier take exposure in 'A' rated counterparties, such exposure comprised 4.3 percent of net assets at end-December 2011. In a recent policy change, minimum rating threshold has been raised to 'A+', with a maximum limit of 10 percent. This policy change will be implemented within 90 days. The asset allocation strategy may witness change if State Bank of Pakistan allows floatation of short tenor Shari'ah compliant government securities.
The weighted average duration of the portfolio will be maintained up to a maximum of six months. With all long -erm Sukuks having maximum rate reset period of six months, interest rate risk is expected to remain in line with the assigned rating. Unlike other income funds managed by UBL Funds which have significant exposure in government securities, UISF posted greater stability in returns. Such performance is likely to continue, going forward. Unit-holding of the fund is fairly concentrated and further efforts may need to be deployed for expanding the investor base.-PR
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