Karachi: The Pakistan Credit Rating Agency Limited (PACRA) has awarded the Faysal Islamic Asset Allocation Fund (FIAAF) a prestigious 5-Star ranking, recognizing its superior risk-adjusted returns despite a challenging market environment. The FIAAF adopted a conservative approach by avoiding direct equity exposure and focusing on Shariah-compliant cash placements and fixed income instruments.

In the fiscal year 2025, the KMI-30 Index experienced a substantial surge of approximately 46.23%, attributed to macroeconomic stabilization and a significant monetary easing cycle. While many Islamic Asset Allocation Funds capitalized on equities to capture gains, FIAAF’s strategy remained aligned with capital preservation. The fund allocated around 86.9% to cash placements, 7.7% to sukuk, 4.8% to ijara sukuk, and 0.6% to other assets as of June 2025.

From a credit quality standpoint, FIAAF’s portfolio emphasized high-grade exposures, with 81.75% in A+ rated instruments, followed by AA, government securities, A, AA+, receivables, and A- rated instruments. This disciplined allocation contributed to the fund’s robust performance.

FIAAF posted a one-year return of approximately 19.61%, which was below the category average of about 29.87% and significantly lower than the equity-driven KMI-30 Index. However, PACRA’s model, which assesses risk-adjusted performance, values not only returns but also volatility control and downside protection. FIAAF excelled in this regard, registering the highest risk-adjusted returns in its category at 17.63% with minimal drawdown of 0.09%.

The fund’s strategic focus on stability, Shariah compliance, and tactical allocation enabled it to achieve competitive, low-volatility returns. This approach resulted in the second highest performance score among its peers, securing the 5-Star ranking from PACRA. FIAAF’s performance underscores its resilience and adaptability in dynamic market conditions, offering investors a reliable option for Shariah-compliant asset management.