Press Release
JCR-VIS Reaffirms Fund Stability Rating of United Growth and Income Fund
Karachi, January 06, 2016: JCR-VIS Credit Rating Co. Ltd. (JCR-VIS) has reaffirmed the Fund Stability Rating (FSR) of United Growth and Income Fund (UGIF) at ‘BBB+(f)’ (Triple B Plus (f)). The previous rating action was announced on August 4, 2014.
UGIF is structured as an aggressive income fund with the ability to assume high level of credit risk. As per the investment policy, the fund is required to maintain minimum of 10% net assets in cash & T-bills, while exposure to Corporate Bonds may comprise up to 50% of net assets. Similarly, exposure in commercial paper and MTS transactions is capped at 20% of the net assets. On average, 52% of the net assets were deployed in sovereign instruments in FY15, while 31% of the net assets comprised TFCs/Sukuk. Given the increased exposure to sovereign instruments and decline in net non-performing assets credit quality of the fund has showcased improvement on a timeline basis.
Weighted Average Maturity (WAM) of the fund is capped at 5 years, while the fund is not permitted to invest in any single instrument with maturity of more than 10 years. Actual WAM of the fund has remained in compliance with the policy. Concentration of large investors in the fund remains substantial, with significant proportion pertaining to United Bank Limited. Liquidity constraints are unlikely to arise given the actual asset allocation and sizeable related party holding.
For further information on this rating announcement, please contact the undersigned (Ext: 516) or Mr. Javed Callea (Ext: 501) at 35311861-70 or fax to 35311872.
Jamal Abbas Zaidi
Advisor
Applicable Rating Criteria: Fund Stability Ratings (February 2012)
http://jcrvis.com.pk/Images/FSRMeth-201202.pdf