Baring Asset Management has announced plans to launch the Baring MENA (Middle East and North Africa) fund, subject to regulatory approval.

The Irish-domiciled Open Ended Investment Company (OEIC) will employ an actively managed strategy using a bottom-up ‘growth at a reasonable price’ (GARP) investment philosophy. The number of holdings in the fund is expected to be 40 to 60, and it will be benchmarked against the MSCI Arabian Markets ex Saudi Arabia index.

The fund will aim to provide long-term capital growth in the value of assets by investing primarily in the countries of the Middle East and North Africa, and it will be managed by Dr Ghadir Abu Leil-Cooper, head of the Emerging Europe, Middle East and Africa Equities team at Barings.

Dr Abu Leil-Cooper, says, ‘The investment rationale for investing in the MENA region is a strong and sustainable one. In our view, economic growth rates are likely to increase by more than five per cent a year for the next few years, driven by high oil and gas prices, infrastructure spend and consumption.

‘With rich oil and gas resources, the area has benefited significantly from the rise in global energy prices in recent years. This is set to continue as energy demand from China and other emerging economies is likely to persist, particularly as rapid economic development of the BRIC (Brazil, Russia, India, China) countries puts pressure on resources while supply remains tight.’

In addition to this, Dr Abu Leil-Cooper points out that GDP growth is increasingly being driven by more diversified sources, such as tourism and construction, where Dubai is the obvious example.

To support the development of the region, there has been an increase in domestic infrastructure spending and Barings expects that, within MENA countries, this will continue to grow, further fuelling GDP growth. Over the next decade, Barings predicts infrastructure investment in the area to reach US$1 trillion.

‘There are large and increasing foreign exchange reserves in the region, meaning that these economies are not dependent on external capital to finance growth. Furthermore, the financial markets in the MENA region are currently undergoing a transformation. Investment restrictions have been relaxed, allowing foreign ownership of listed stocks to increase. This has improved liquidity and outside interest.

‘Domestic consumer spending is also taking off as the wealth effect of the oil and gas industry filters down through these economies. The financial outlook for the region remains strong as these economies, on the whole, are running a twin current account and budget surplus. The MENA region still offers value, with attractive bottom-up investment opportunities and reasonable share price valuations.’

The fund will have an annual management charge of 1.5 per cent and a performance fee of 15 per cent calculated on outperformance of the MSCI Arabian Markets ex Saudi Arabia index. The minimum investment will be £5,000.

For more information, visit www.barings.com