VIS Reaffirms Fund Stability Rating of HBL Cash Fund at 'AA+ (f)'

Strategic Insights -

HBL Cash Fund, an open-ended money market fund, has experienced significant growth, with its net asset value increasing by ~50% to Rs. 26.4 billion by the end of FY21. The fund aims to provide competitive returns to investors through investments in cash and cash equivalents, sovereign instruments, and money market placements. Despite the growth momentum continuing in the ongoing fiscal year, the fund's asset allocation and credit quality remain consistent with the limits stipulated in the investment policy guidelines.

Key Takeaways:

  • VIS Credit Rating Company Limited has reaffirmed the Fund Stability Rating (FSR) of HBL Cash Fund at 'AA+ (f)'.
  • The fund has demonstrated a substantial growth of ~50% in its net asset value, increasing to Rs. 26.4 billion by the end of FY21.
  • HBL Cash Fund achieved a growth momentum in the ongoing fiscal year.
  • The fund's asset allocation remains in line with the limits stipulated in the Investment Policy Statement (IPS), with a weighted average maturity (WAM) of 90 days.
  • The fund invested 95% of its assets in 'AAA' rated issues/ issuers on a monthly average basis, with T-bills receiving the highest allocation.
  • The fund has consistently outperformed its benchmark and peer average in FY21, remaining in the first quartile in fund performance.
  • Top-10 investors constitute approximately three-fifths of the total fund size, indicating potential for improvement.
  • HBL Cash Fund adheres to the investment policy guidelines for the assigned rating.

Statistics:

  • Net asset value of HBL Cash Fund: Rs. 26.4 billion (FY20: Rs. 17.9 billion).
  • Growth momentum of HBL Cash Fund in the ongoing fiscal year: Consistent (<50% growth rate mentioned).
  • Weighted Average Maturity (WAM) of the fund: 90 days.
  • Allocation of fund's assets in 'AAA' rated issues/issuers: 95% on a monthly average basis.
  • Performance of HBL Cash Fund: Outperformed benchmark and peer average in FY21, ranking in the first quartile.
  • Share of top-10 investors in the total fund size: Approximately three-fifths (<60% mentioned).

Sources:

  • VIS Credit Rating Company Limited, Press Release - Reaffirmation of Fund Stability Rating (FSR) of HBL Cash Fund, January 04, 2022 (PPI-OT)