The Melchior selected trust Pakistan opportunities fund will be managed by Dalton and advised by Karachi-based KASB Funds, part of the group which has been linked with Merrill Lynch since 1993.
The fund aims to outperform the KSE 30 index using a bottom-up fundamental stock selection approach. It will contain 35-45 stocks, with non-index stock comprising around 20 per cent of the portfolio. Its investment approach will be similar to the KASB stockmarket fund, launched in 2007.
Portfolio managers Faisal Potrik is head of fund management at KASB Funds. He has eight years investment experience in Pakistna markets, comprising five years in equity research and three in fund management. He was previously manger of the First Capital mutual fund.
Pakistan is seen as a good area in which to invest because it has seen strong economic growth over the last seven years, particularly in the service sector. Dalton and KASB expect this to continue, but anticipate growth coming from industry and investment in infrastructure.
The country is experiencing increased domestic demand for goods such as mobile phones from a young population whose incomes are increasing.
Dalton regards the region as similar to India five year ago and liken stocks to buying India at half the price. Stocks in Pakistan are cheaper than those in other parts of Asia and the Middle East, with a low correlation to the US stockmarket.
However, the fund is higher risk and its success will partly depend on the local knowledge provided by KASB Funds.