Press Release

VIS Reaffirms Fund Stability Rating of Meezan Sovereign Fund

Karachi, December 27, 2023: VIS Credit Rating Company Limited (VIS) has reaffirmed Fund Stability Ratings (FSR) of Meezan Sovereign Fund (MSF) at ‘AA(f)’ (Double A (f)). Medium to long-term entity rating of ‘AA’ reflects high degree of stability in Net Asset Value; Risk is modest but may vary slightly from time to time because of changing economic conditions. Previous rating action was announced on January 03, 2023.

Launched in Feb 2010, Meezan Sovereign Fund (MSF) is an open ended Shariah compliant sovereign fund, managed by Al-Meezan Investment Management Limited. The objective of the scheme is to seek maximum possible preservation of capital and a reasonable rate of return.

Over the past two consecutive years, the Assets Under Management (AUM) of the fund have shown a consistent decline. MSF did not meet the minimum 70% allocation in government securities in Dec’22, Jan’23, Feb’23, Mar’23, and Jun’23, and also fell short of the 10% cash allocation threshold in Oct’22. However, these breaches are within compliance when assessed on a monthly average basis for FY23.

The fund maintains its minimum credit rating requirement of A+ as outlined in the Offering Document. The fund also adhered to the maximum duration of 180 days as specified in the Offering Document. As of June’23, retail investors dominate the fund's total assets while the fund maintains moderate concentration risk, with the top 10 investors holding 28.7% of the total AUMs.

During the period under review, fund returns have notably outperformed the benchmark rates. Recently, in Sep’23, the fund has revised its benchmark from, 6-month PKISRV rate to the Islamic banking savings deposit rate. Relative to its peers, the fund returns was lower than peer average as of Jun’23, hence placed in the third quartile relative to peers.

For further information on this rating announcement, please contact Mr. M. Amin Hamdani (Ext: 217) or the undersigned (Ext: 201) at (021) 35311861-4 or email at info@vis.com.pk.






Javed Callea
Advisor

Applicable Rating Criteria: Fund Stability
https://docs.vis.com.pk/docs/FundstabilityRating.pdf

VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf

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