Press Release

VIS Reaffirms Fund Stability Rating of Faysal Government Securities Fund

Karachi, October 04, 2023: VIS Credit Rating Company Limited (VIS) has reaffirmed the Fund Stability Rating (FSR) of Faysal Government Securities Fund (FGSF) at ‘AA’ (Double A). Medium to long-term rating of ‘AA’ denotes high degree of stability in NAV. Risk is modest but may vary slightly from time to time because of changing economic conditions. Previous rating action was announced on August 01, 2022.

Launched in March 2020, FGSF is an open-ended mutual fund categorized as an income fund and managed by Faysal Asset Management Limited, with an aim to provide competitive returns by investing primarily in Government Securities, offering units to retail and institutional investors.

The reaffirmed rating reflects FGSF's sound credit quality and liquid investment portfolio, although the fund size noted a decline in FY23. Investment Policy Statement (IPS) outlines a conservative risk profile, with a minimum of 70% of investments in Government Securities. However, ~67% of the net assets were exposed to Government Securities, slightly below the required threshold. Assets Under Management (AUM) saw a notable shift towards T-Bills while reducing exposure to PIBs and Commercial Papers. Throughout the year, the majority of the fund's investment portfolio (over half) was in 'AAA' rated issues/issuers. The rest was mainly allocated to 'AA' and 'AA-' rated exposures. Weighted Average Maturity (WAM) of the fund is capped at 4 years, with target duration capped at 6 months, both of which the fund predominantly adhered to during the review period.

As of June 2023, corporate investors made up nearly 99.6% of the fund's base, indicating higher redemption risk. However, with the fund's shift to more liquid investments like T-Bills, its ability to meet redemptions is considered sufficient. In terms of performance, FGSF yielded an annualized return of about 15.2% in FY23, falling behind its benchmark and peers, positioning it in the third quartile. Improvement in the fund’s performance remains crucial for rating, going forward.

For further information on this rating announcement, please contact Mr. Muhammad Tabish (Ext: 216) or the undersigned (Ext: 207) at (021) 35311861-4 or email at info@vis.com.pk.



Sara Ahmed
Director

Applicable Rating Criteria: Fund Stability Ratings (September 2023)
https://docs.vis.com.pk/docs/FundstabilityRating.pdf

VIS Rating scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf

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