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Pak Qatar Income Plan Holds Steady with Enhanced AUM and Stable Ratings

Karachi, The Pak Qatar Islamic Income Fund, catering to a medium-risk profile and focused on Shariah-compliant investments, has maintained a stable rating for its Pak Qatar Income Plan (PQIP). The Plan is specifically designed for corporate and high net worth investors who prefer yearly dividends within a stable income category.

According to The Pakistan Credit Rating Agency Limited, the PQIP is an integral part of the Pak Qatar Islamic Income Fund, which also includes the Pak-Qatar Monthly Income Plan and the Pak-Qatar Khalis Bachat Plan. The Fund's primary goal is to maximize investor returns through investments in Shariah-compliant, authorized avenues. PQIP, with a perpetual term, aims to generate superior, long-term, risk-adjusted returns by investing in medium to long-term income instruments and short-tenor money market instruments. The Plan adheres to a policy of investing only in avenues rated single A or higher and has the discretion to change its dividend frequency to benefit its unit holders, subject to prior intimation.

As of the end of September 2023, PQIP's Asset Under Management (AUM) size was PKR 6,299 million, a substantial increase from PKR 4,764 million in June 2023. The Fund's allocation strategy as of September 2023 included approximately 26.4% in deposits with AA and above-rated banks, around 39.9% in mainly A+ and above-rated Corporate Sukuk, and about 27.78% in Government of Pakistan Ijara Sukuk. The duration of the Fund stood at 35 days at the end of September 2023, effectively limiting exposure to interest rate risk. However, the Weighted Average Maturity (WAM) of the Fund, standing at 747 days as of September 2023, indicated a high level of credit risk, particularly given its investments in long-term Government Ijara Sukuk and Corporate Sukuk. The unit holding pattern of the Fund showed a high concentration among the top four investors, who are related parties, thereby reducing exposure to redemption pressures. Despite these concentrations, the Fund's strong liquid profile has sustained its ability to meet redemptions. The Fund remained compliant with credit quality criteria and achieved an annualized return of 18.9% as of September 2023, in line with its market peers.

PACRA notes that any significant changes in the investment policy or the rating criteria could impact the stability rating of the Plan. The Plan's risk profile may experience slight variations in response to the economic conditions' volatility.

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