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JCR reaffirms FSR UGI fund

August 5, 2014

JCR-VIS Credit Rating Co, Ltd (JCR-VIS) has reaffirmed the fund stability rating (FSR) of United Growth and Income Fund (UGIF) at‘BBB+(f) ( triple B plus(f).

Structured as an aggressive income fund, UGIF has the flexibility to assume high level of credit risk to capitalize on potential upside and is suited for investors with a long term investment horizon, said a press release here on Monday.

As per the fund’s operational investment policy as least 10% of the net assets have to be maintained in form of cash and 10% in form of T-bills while exposure of corporate bonds/commercial paper may comprise sovereign instrument and TFCs/Sukuk each, over the last year.

Credit quality of the TFCs/Sukuk portfolio has showcased improvement as non-performing proportion declined on account of recoveries and settlements. The remaining non-performing exposures have mostly been provided.

In addition fresh exposures have mostly been built against sound counterparts.

As an aggressive income fund, UGIF can invest in instruments with maturities of up to 10 years, investment guidelines dictate maximum weighted average maturity (WAM) of 5 years (excluding sovereign instruments) and maximum duration of 2.5 years Actual WAM of the fund has remained compliant with the guideline.

Investor activity in the fund continues to remain dull as issuance of fresh units of UGIF continues to be suspended top 10 investors continue to hold a substantial proportion of the fund given that major part of this pertains to United Bank Limited (UBL), liquidity constraints, on account of redemption are unlikely to arise.

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Source: Frontier Star (Pakistan)

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