Managed by Dalton Strategic Partnership LLP and advised by KASB Funds, based in Karachi, this fund seeks to deliver capital growth through investment in companies listed on the Karachi stock market.

The fund is a Luxembourg-domiciled SICAV and represents strong long-term growth potential for investors looking to add some exposure to high-growth, developing countries.

The Pakistan Opportunities fund will invest in a portfolio of between 35 and 45 stocks, and the investment team at KASB will employ a bottom-up investment approach.

According to KASB Funds, the Karachi stock market is poised to benefit from the continued growth in the economy, particularly in the energy and banking sectors.

Minimum investment: US$10,000 or equivalent
Annual management charge: 1.75% plus performance fee of 15% of the outperform-ance of the KSE 30
Contact: For more information, visit www.daltonsp.com

James Davies says:
The good news is that, contrary to what one might see on TV, Pakistan isn’t all lawless bandit country and political shenanigans. The country of over 160 million people has enjoyed a period of sustained economic growth while benefiting from a significant and educated middle class.

This new fund from Dalton Strategic Partnership LLP aims to tap into the current investor appetite for ‘frontier markets’ and claims to be the only fund in Luxembourg that is dedicated to investing in Pakistani equities.

Although I have my doubts as to the necessity of a Pakistan equity fund, there are some strong positives. Like many developing countries, there is a burgeoning domestic demand within Pakistan, fuelling opportunity within sectors such as personal finance and consumer-related industries.

The country is also a way to gain exposure to the boom occurring in the Middle East, where foreign direct investment has increased and there has been a significant positive effect from the remittances back to Pakistan by the three million Pakistani workers in the Gulf region. There will, no doubt, be investors who will be interested in gaining exposure to what is a dynamic frontier market.

An investment of this sort, however, should not be taken lightly, and I do not believe this fund is suitable for the occasional investor. Frontier markets can be extremely volatile and carry a considerable risk; and although the bulk of the fund will be invested in the more liquid KSE 30, liquidity should still be considered a risk for the fund manager.

With most developed markets contemplating recession and suffering from slow economic growth, there will be a tendency among investors to look towards ever more niche investment markets to generate returns. As with any investment, it is important to ask whether the potential return is worth the risk, and for me this fund just falls short.

I believe there are currently better ways to gain exposure to Pakistan, either through a Middle East and Africa fund or even a broader Asia or emerging market fund – I do not think the market yet justifies a single country fund within an investment portfolio. It is, however, a fast-growing market and it is certainly worthy of longer-term attention.

2 Stars