ICRA has assigned the conditional rating of mf AAA (SO) [pronounced m f triple A Structured Obligation] to the PNB Suraksha fund, capital protection orientated and close-ended fund to be launched post receipt of regulatory approvals†.
The rating indicates highest degree of certainty for payment of face value of the mutual fund units on maturity to the unit holders. The rating should, however, not be construed as an indication of expected returns, prospective performance of the Mutual Fund scheme, NAV or of volatility in its returns.
The conditional rating is subject to the scheme receiving the regulatory approvals and fulfilment of all conditions specified in the portfolio structure. The portfolio structure has been designed with the intention of protecting the unit holder's capital, which is arrived at by having majority of investments in debt securities. The scheme would invest only in government securities and securities rated by ICRA at the rating of LAAA or equivalent, mitigating any concerns on credit risk.
The proportion of debt securities is calculated such that the redemption value of debt less Asset Management Company's (AMC) recurring expenses charged to the scheme will be equal to or greater than the initial unit holder's capital, offering highest degree of protection of the unit holder's capital. ICRA has factored in the credit risk of debt investments, re-investment risk of interim receipts, precondition of marginal tenure mismatches and obligor concentrations.
The debt portion would be passively managed. The balance portion would be invested in the Units of Principal Large Cap Fund to provide any upside potential to the unit holders. At the same time, given the proportion of high credit quality debt investments and the portfolio structure, the downside is protected and the investor may not suffer loss of initial investment at the time of maturity
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