The Egyptian market is up 4.94 percent this year, outperforming other markets in the Middle East region, including Dubai, Abu Dhabi, and Qatar.
Aiming to shore up investor confidence, Egypt has been implementing economic reforms as part of a three-year, $12 billion agreement with the International Monetary Fund in November 2016. The reforms included a value-added tax, cuts to energy subsidies and a steep currency devaluation.
Economists polled by Reuters last month expected Egypt's economy to grow 5.5% in the current 2018/2019 fiscal year.
"Egypt is undoubtedly the best growth story in MENA," Bhandari said. "The reform programme is on track and once the inflationary pressures ease, we expect a pick up in the capex cycle."
Fifty-five percent of fund mangers said they would increase investments in the UAE, continuing a trend from previous months.
Dubai was one of the worst-performing markets globally last year, but has rebounded somewhat this year, with its benchmark index up 2.16 percent so far. Abu Dhabi, meanwhile, is down 3.36 percent this year.
While Dubai's index had shown signs of a stronger recovery earlier this year, rising past 9% by the end of April, it has fallen this month, due to global trade war and regional geo-political tensions.
"Regional markets are and will continue to be very volatile in the coming weeks, given the rising geopolitical tensions," said Talal Samhouri, head of asset management at Amwal LLC.
"That will be an opportunity to take advantage of price volatilities, as usually these gyrations overshoot to either way, so we intend to emphasize security selection versus country allocation during the coming months."
Five of the 11 fund managers said they would increase their investments in Kuwait. Kuwait's .BKP index is up 15.1 percent, making it the best performing market in the region.
"Currently the only markets that have sensible valuations are Qatar and Kuwait," Samhouri said.
Most of the fund managers polled said they were keeping their allocations in Qatar, Saudi Arabia and Turkey the same.
(Reporting by Nafisa Eltahir; Editing by Catherine Evans) ((Nafisa.Eltahir@thomsonreuters.com; +971 55 66 85163;))