Dubai-based fund manager Algebra Capital and Bahrain's Elaf Bank launched on Sunday an Islamic-compliant fund with an initial size of $100 million to invest in securities in the Middle East, North Africa and Asia.

The Sukuk Fund is an open-ended vehicle offering returns above 8 per cent but will target an initial size of $100 million.

'This will be the second fund managed by Algebra Capital in its fixed income line of business,' said Ziad Makkawi, CEO of Algebra Capital said in a statement.

'The Sukuk Fund reflects both our constructive view of the region's fixed income markets; as well as the importance of the sharia-compliant space to us,' Makkawi said.

Founded in 2006, Algebra advises on or manages around $1.1 billion in assets. Franklin Resources owns a 25 per cent stake in Algebra, which is sub-advisor on a Middle East and North Africa Fund launched by the California-based firm in June.

Elaf, which is seeding the fund, is an Islamic bank founded in Bahrain in 2007, which is targeting the equity and Islamic financing capital market.-Reuters