The first Luxembourg Ucits fund dedicated to investing in Pakistan equities, the Melchior Selected Trust Pakistan Opportunities fund (MSTPOF), will be launched on 19 June. The fund will be managed by Dalton Strategic Partnership and advised by Karachi-based KASB Funds.
Pakistan is one of the ‘frontier’ emerging markets that are gaining in popularity as investors look further afield for returns. Dalton says the country’s strategic position as a trade corridor between the Middle East, Central Asia, China and India has helped fuel the country’s 7% pa economic growth, and it has also benefited from its links with wealthy Middle East economies, with both foreign direct investment and workers’ remittances from the three million Pakistanis employed in the Gulf states accelerating.
The Pakistan equity market has a 2008 P/E multiple of less than 10x and a dividend yield of nearly 5%. At the start of this year it was described by Mark Matthews, chief Asia strategist at Merrill Lynch, as “the greatest information arbitrage in Asia – the place where perception and reality are most mismatched”.
David Graham, partner at Dalton Strategic Partnership, said the present Pakistan market is similar to the pre-rally Indian market of five years ago, so it is like “buying India at half the price”. He added: “We are pleased to be launching the first Ucits fund dedicated to the Pakistan stockmarket, and believe it represents strong long-term growth to investors looking to add some exposure to high-growth, developing economies.”
The portfolio will be managed by Faisal Potrik, head of fund management at KASB Funds, who has eight years’ experience investing in Pakistan’s capital markets and is responsible for managing PKR12bn in three listed mutual funds in Pakistan.
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