Brazil and China equity funds came out tops in the quarter ended Sept 30 - thanks to improving investment sentiment in both markets, lifting asset prices and equity markets and boosting funds invested there.
But gold and resources funds still lead the pack so far this year, despite a weak quarter for gold-related equities, according to local unit trust distributor Fundsupermart.
Despite Brexit and a volatile September, the third quarter of this year was a decent period for equity markets, with equity funds posting an average return of 7.15 per cent on the Fundsupermart.com platform.
Over the same period, bond funds were up 2.94 per cent on average.
HSBC Global Investment Funds - Brazil Equity Fund achieved returns of 10.37 per cent, while Parvest Equity Brazil posted 12.6 per cent returns during the third quarter of this year.
Returns for the year to date of the two funds - invested in the Brazilian equity market - are 53.92 per cent and 52.8 per cent respectively.
This is partly because the Brazilian equity market has seen a strong performance since the ousting of President Dilma Rousseff, with investors welcoming the new government there.
According to Fundsupermart.com, Brazilian equities also benefited from an upward rerating in commodity-related sectors in the same period. The appreciation of the Brazilian real against the Singapore dollar also helped boost the performance of Brazilian equity funds in the year to date.
As for the Chinese H-share market, it has risen on the back of a slew of economic data in the second and third quarters of this year.
For the three months ended Sept 30, the top Chinese equity funds are Schroder China Opportunities Fund with a gain of 17.55 per cent (with a year-to-date return of 7.48 per cent) and BlackRock Global Funds - China Fund which posted a 16.36 per cent return (with a year-to-date return of 7.47 per cent).
ROOM FOR GROWTH
Should corporate earnings revisions actually sustain and see continued upgrades moving forward, equity market valuations in emerging markets will remain supported.
'' MR KEAN CHAN, senior analyst at Fundsupermart.com, on compelling valuations in emerging market equities.
Mr Kean Chan, senior analyst at Fundsupermart.com, said: "This may suggest that there are signs of stabilisation in the Chinese economy, as well as expectations for the impending roll-out of the Shenzhen-Hong Kong Stock Connect initiative by the year end."
Russia was another emerging market that saw strong performances during the third quarter and throughout the year, buoyed by a recovery in investment sentiment, a rise in commodity prices and a gradual improvement of economic conditions.
For the year to date, funds invested in gold-related equities and the global resources sector are still on top. Seven of the top 10 equity funds were based on gold, metals and resources. The top fund is the Deutsche Noor Precious Metal Securities, which gained 87.43 per cent.
Gold-related equities actually had a tepid quarter as markets remained concerned over an increasingly hawkish Federal Reserve.
As such, funds like Investec Global Strategy Fund - Global Gold Fund, BlackRock Global Funds - World Gold Fund and UOB United Gold & General Fund posted slight losses in the third quarter.
But they have achieved strong returns in the year to date. For example, the best-performing gold fund achieved a return of 79.6 per cent for the year to date.
European and Japanese funds rebounded in the three months ended Sept 30, but continued to stay at the bottom in terms of returns for the year to date.
Fidelity Funds - Italy Fund posted a positive return of 3.34 per cent in the third quarter, but incurred a loss of 17.56 per cent for the year to date. LionGlobal Japan Growth Fund (SGD-H) ended the quarter with a 13.31 per cent loss for the year to date.
Mr Chan said: "Sentiment was poor as markets remained concerned over recapitalisation issues surrounding Italian banks, as well as an upcoming political referendum in the southern European country."
On the other hand, British equities have performed strongly since the unexpected Brexit vote in late June, but the weakening of the pound against the Singapore dollar has detracted significantly from their performance in Sing-dollar terms.
Looking ahead, Mr Chan said that the emerging market equity space still trades at compelling valuations, compared with the developed markets of the United States and Europe.
"Should corporate earnings revisions actually sustain and see continued upgrades moving forward, equity market valuations in emerging markets will remain supported," he said.
For bonds, he remained positive on the US high-yield bond market, but advised that they should be combined with other safer bond market segments to ensure sufficient levels of diversification within the fixed-income allocation of a portfolio.