Press Release

JCR-VIS Reaffirms Fund Stability Rating of United Growth and Income Fund

Karachi, December 30, 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 January 06, 2016.

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% and 25% of the net assets, respectively. On average, 35% of the net assets were deployed in sovereign instruments in FY16, while 32% of the net assets comprised TFCs/Sukuk. Credit risk profile remained within manageable limits, with sovereign exposure representing major portion of net assets during FY16. The rating is constrained in view of the fund’s ability, under its investment policy, to assume risk, with no minimum threshold defined for credit risk in addition to which there is no restriction on time to maturity of a single security.

Weighted Average Maturity (WAM) of the fund is capped at 5 years. Duration of the fund has witnessed notable decline to 0.86 years at end-October’2016. 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: 201) or Mr. Javed Callea (Ext: 207) 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

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