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Dalton Strategic Partnership has become the first UK fund manager to offer focused retail access to Pakistani equities, with the launch of its Melchior Selected Trust: Pakistan Opportunities fund.

The fund, whose investment date was delayed to avoid a sharp correction in the Karachi Stock Exchange in May, is slated for release on 19 June.

Portfolio management has been outsourced to Karachi-based KASB Funds, which was founded in 1952 and has been 5 per cent owned by BlackRock since the early 1990s.

KASB chief executive and chief investment officer Faisal Potrik will run a concentrated selection of 35-45 stocks - 80 per cent of which will be drawn from the 30 largest companies listed on the KSE. The remaining 20 per cent will be non-benchmark positions.

Starting overweights are in the oil exploration, chemicals, agriculture and cement sectors.

David Graham, partner at DSP, said the average price/earnings multiple of 11 times for KSE stocks did not price in the country's prospects, which were reminiscent of India's five years ago.

He said: "Pakistan is extraordinarily well positioned between the oil-rich Middle East and the oil-deficient China and India. All sorts of pipelines are coming across Pakistan, and Pakistan itself is growing as an energy producer with an aggressive exploration programme. With wealth creation going on in the Middle East, a significant amount of money is going into Pakistan."

While Mr Graham acknowledged an inherent degree of political risk in the region, he insisted the underlying fundamentals, with growing consumer spending and a population of 160m, would drive the country's equity market for the foreseeable future.

He added: "What people don't realise is Pakistan is pretty broad in the number of stocks it offers. There are over 600 listed companies, and for people wanting to play the Middle East story, this is an interesting spin on that."

Mr Potrik said the 20 per cent drop in the KSE in May had purged bad news from share prices, and said it was "an exciting time" to be investing in Pakistani equities.

The manager already runs PKR12bn (£90m) across three listed mutual funds in Pakistan.

Fund facts

Benchmark - KSE30 index

Domicile - Luxembourg

Minimum investment - $10,000 (£5000)

Initial charge - 1.75 per cent for retail shares

Performance fee - 15 per cent outperformance of the KSE30