KARACHI, Feb 17: Pak Oman Asset Management Company Limited and the Central Depository Company (CDC) signed a trust deed on Saturday for the Pak Oman Advantage Fund (POAF).

The significant feature of POAF is that it is the first closed end income fund in Pakistani market that carries a fixed duration. The Fund would have a limited life of eight years, after which it would be wound up and investors paid-back.

Pak Oman Asset Management stated in a press release issued on Saturday that POAF would invest primarily in instruments that provide investors with steady and market based fixed income return with minimal interest rate, price and credit risk.

It said that POAF was a closed end fund with the objective to invest in high quality debt instruments. At least 75 per cent of the fund would be invested in tier-2 TFCs issued by commercial banks thereby significantly reducing credit risk in the underlying asset pool.

“The remaining 25 per cent will be invested in other TFCs, bank placements, Reverse repurchase transactions where the underlying securities are of acceptable risk (government or investment grade corporate bonds) and CFS,” the company stated.

The fund had already been offered directly to institutional and corporate investors through a pre-IPO and would subsequently be offered by IPO to individuals, retirement plans and other investors.

The company claimed to have attracted a wide variety of investors in pre-IPO and the fund had received preliminary fund stability rating of AA- from JCR-VIS, “denoting a high degree of stability in returns where risk is modest”.

The fund would be managed by Pak Oman Asset Management Company which is a joint venture between Pak Oman Investment Company Limited, Oman National Investment Corporation Holding, BankMuscat SAOG, and National Logistics Cell SRBF.