Press Release

JCR-VIS Assigns Initial Capital Protected Fund Rating to ABL Islamic Principal Preservation Fund
 

Karachi, August 31, 2015: JCR-VIS Credit Rating Company Ltd. (JCR-VIS) has assigned initial capital protection rating of ‘CP2+’ to ABL Islamic Principal Preservation Fund (ABL IPPF - Dynamic Hedge Fund [DHF]) which denotes a high certainty of principal protection.

JCR-VIS assigns rating to all funds following Static and Dynamic Hedge categories of capital protection strategies on a common scale, ranging from CP1 to CP5 with CP1 having the highest certainty of capital protection. The capital protection rating comments on the degree of certainty of capital protection and does not comment on the return potential of the fund. Moreover, the rating denotes the level of expected capital protection at the maturity of the scheme and does not comment on the capital protection in periods prior to maturity.

Ratings take cognizance of the parameters laid down by the fund manager to arrive at the risk appetite of the fund, which includes conservativeness of CPPI inputs (floor value, multiplier & cushion value). Frequency of change in CPPI inputs is also assessed from the risk perspective.

ABL IPPF was launched in December’2013 as an open-end Shariah Compliant Fund of Funds Scheme. The fund has an investment horizon of 2 years and follows a Constant Proportion Portfolio Insurance (CPPI) Dynamic Hedge based strategy that features varying asset allocation between an equity fund, i.e. ABL Islamic Stock Fund (ABLISF), and bank balances with various banks. Investment of the underlying equity fund, ABLISF, primarily comprises exposure to blue chip companies while investment in bank balances have been with banks having rating of AA/A1+ denoting low exposure to credit, liquidity and market risk.

With just 4 months left to maturity, adequate liquidity build-up and a sizeable return since inception of 23.47% (till July’2015), the fund has high certainty of capital protection at maturity. The management has pursued a conservative approach by utilizing a profit lock in strategy through which around 10% of the profits of the fund have been allocated towards fixed income portion thereby adding further margin to capital protection. Unit holding of ABL IPPF features sizeable concentration in the form of institutional investors. This risk is mitigated by the underlying allocation of equity and cash having adequate liquidity to suffice for potential redemptions.

All outstanding Capital Protection Ratings are subject to a quarterly review by JCR-VIS.

For further information on this rating announcement, please contact the undersigned (Ext: 516) or Mr. Javed Callea (Ext: 501) at (021)35311861-70 or fax to (021)35311872-3.



Jamal Abbas Zaidi
Deputy CEO


Applicable Rating Criteria
http://jcrvis.com.pk/Images/CPPIMeth2015.pdf

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Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited VIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.VIS, the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report.VIS is not an NRSRO and its credit ratings are not NRSRO credit ratings.VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2015 VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to VIS.

JCR-VIS Credit Rating Company Limited