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Franklin Templeton Investments has revealed full details of its MENA fund, which aims to exploit liquidity growth and budget surpluses created by high oil prices in the Middle East and North Africa.

The Luxembourg-domiciled Sicav went live on 16 June and is managed by Franklin Global Advisers and Dubai-based asset manager Algebra Capital.

The company said it would look to launch a tax-friendly, sterling-priced, distributor share class for UK investors within the coming weeks.

Ziad Makkawi, chief executive of Algebra Capital, said the market capitalisation of the MENA region has increased tenfold over the last five years and currently stands at $1.3trn (£667.7bn). He said India and China were growing faster, but were more exposed to global market movements.

"Real structural changes are occurring because of the oil price rise. Most nations’ budgets are based on an oil price of $55 a barrel. Everything above that is surplus," Mr Makkawi said.

"The current price is $130 a barrel, so lots of that extra money is being put into tourism, transportation, logistics and financial services."

Stephen Dover, managing director and international chief investment officer of local asset management at Franklin Global Advisers, will be managing the fund. Purav Jhaveri, vice president and senior investment strategist, will also serve as a manager.

The MENA fund seeks to achieve long-term capital appreciation by investing in a concentrated portfolio of 40-60 equity and fixed income stocks, as well as financial derivative instruments, across all sectors and market capitalisation ranges in the Middle East and North Africa region.

The managers are bottom-up stock pickers, but use a macro overlay. The largest geographical positions in the portfolio are the UAE, Qatar, Egypt, Saudi Arabia and Kuwait.

Construction, financial services and energy-intensive industries are the largest industry weightings.

The fund currently has no exposure to Lebanon or Jordan due to geopolitical issues. But Mr Makkawi said the greatest danger for investors was inflation.

"Inflation poses the biggest risk and it is largely a symptom of what is happening in the rest of the world," he said.

"The geopolitical problems have been around for years and are largely priced in. The outbreak of wars in Lebanon or Iran would probably prove to be short-lived and also present buying opportunities."

Jamie Hammond, senior director of global adviser services at Franklin Templeton in London, said: "The combination of Franklin Templeton’s experience in global asset management and the strong on-the-ground presence provided by sub-advisers Algebra Capital makes the Franklin MENA fund a suitable choice for investors seeking strong long-term capital appreciation."