Press Release

JCR-VIS Reaffirms Fund Stability Rating of UBL Islamic Sovereign Fund

Karachi, April 16, 2013: JCR-VIS Credit Rating Co. Ltd. (JCR-VIS) has reaffirmed the Fund Stability Rating of UBL Islamic Sovereign Fund (UISF) at ‘AA-(f)’ (Double A Minus (f)).

UISF is as an open-end Shariah-compliant government securities fund, managed by UBL Fund Managers Limited (UBL Funds). Previously, the fund was categorized as an income fund; its category was changed to government securities fund in July 2012. With change in category, minimum allocation limit of 70% to Shariah compliant government securities (on a quarterly average basis) was introduced in the offering document of the fund. The operational investment policy of the fund for FY13 further restricts the credit risk exposure of the fund, with stipulation of minimum credit rating of ‘AA-’ (Double A-minus) for investment in avenues other than government securities. Additionally, to contain profit rate risk; maximum duration limit of 180 days has also been specified in the operational investment policy.

There have been instances where month-end allocation in government securities has been below 70% which was on account of non-availability of GoP Ijarah Sukuks; however, based on quarterly averages, the asset allocation of the fund remained in compliance with constitutive documents. Weighted average duration of the fund was 88 days at end-Dec’12 and is expected to remain below 180 days; given that Shariah-compliant traded instruments in the market have a maximum profit rate reset period of 6 months. With GoP Ijarah Sukuks held by the fund not marked to market, the NAV may not reflect the true market value of fund’s investments.

The fund has consistently outperformed the benchmark since it invests mostly in GoP Ijarah Sukuks which generally provide higher returns compared to the benchmark rate which is ‘Average of 6 Months Deposit Rates of 3 Islamic Banks’. Concentration in investor profile has reduced on a timeline basis.

For further information on this rating announcement, please contact Mr. Javed Callea (Ext: 501) or Ms. Sobia Maqbool, CFA (Ext: 604) at 35311861-70 or fax to 35311872.




Jamal Abbas Zaidi
Deputy CEO

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