Atlas Islamic Money Market Fund Maintains Low Risk Profile

Strategic Insights -

Atlas Islamic Money Market Fund, a money market fund in Pakistan, has maintained its low risk profile, allocating a significant portion of its assets to high-rated banks and remaining invested in low-risk, liquid avenues. As of June 2021, the fund had invested around 44% in bank-rated 'AA' and 42% in bai-mujjal rated 'AA+' and above. The top 10 investors held ~88% of the fund, with ~64% related parties, keeping redemption pressure at a low level.

Key Takeaways:

  • The fund has allocated ~44% of its assets to bank-rated 'AA' and ~42% to bai-mujjal rated 'AA+' and above, indicating its low-risk profile.
  • The fund has a duration of 39 days at end Jun'21, suggesting high liquidity.
  • The top 10 investors held ~88% of the fund, with ~64% related parties, keeping redemption pressure low.
  • The investment policy of the fund strictly prohibits investment in below AA-rated avenues, limiting the build-up of redemption pressure.
  • The fund allows investments only in liquid and low-risk profile avenues, further reducing redemption pressure.
  • The fund is actively diversifying its assets by placing funds in the Islamic window of AAA and AA+ rated banks.
  • The strategy of the fund represents high liquidity and low risk profile, which bodes well for the rating.
  • Any breach of the investment policy is considered negative, indicating the fund's commitment to maintaining its low-risk profile.

Statistics:

  • As of June 2021, the fund had invested ~44% of its assets in bank-rated 'AA'.
  • The fund had invested ~42% of its assets in bai-mujjal rated 'AA+' and above.
  • The duration of the fund at end Jun'21 was 39 days, indicating high liquidity.
  • The top 10 investors held ~88% of the fund.
  • ~64% of the top 10 investors were related parties.
  • The investment policy of the fund prohibits investment in below AA-rated avenues.

Sources:

  • Press release issued by The Pakistan Credit Rating Agency Limited (PACRA) on October 18, 2021.
  • The offering document of Atlas Islamic Money Market Fund.
  • The website of The Pakistan Credit Rating Agency Limited (PACRA) - www.pacra.com.