Funds focused on Asian shares put in strong performances in the first quarter, thanks to markedly better business sentiment.
India stood out with equity funds angled on the country a dominant force in Fundsupermart's ranking for the three months to March 31.
The top two equity fund performers were the Amundi India Infrastructure Fund, which delivered a 17.61 per cent return, and the Eastspring Investments - India Discovery Fund, with a return of 15.81 per cent. The returns are calculated in Singdollar terms. The HSBC Global Investment Funds - Indian Equity had a return of 14.91 per cent, followed by the BlackRock Global Fund (BGF) India Fund with a 14.28 per cent return, both also among the top 10 performers.
These generous returns came as the Bombay Stock Exchange benchmark index Sensex racked up a 12.5 per cent return in the first quarter.
"A quarter which was expected to be the worst hit on account of the demonetisation turned out to be one of the best for the Indian market," said Mr Kean Chan, research assistant manager of iFast, which is the company behind the unit trust platform Fundsupermart.
"The earnings of Indian companies came in better than expected and gross domestic product grew 7 per cent in the last quarter of 2016, signalling that concerns regarding demonetisation may have been overblown."
But it was not just India ruling the roost. The regional benchmark MSCI Asia ex-Japan was up 9.2 per cent in the first quarter, with South Korea, Singapore, Taiwan and China among the drivers.
South Korea's benchmark Kospi posted a 10.9 per cent first-quarter return, followed by Singapore's Straits Times Index at 10.2 per cent. The Taiwan Stock Exchange Index was up 9.2 per cent and the Hang Seng Mainland 100 index, which tracks the stocks of the top 100 mainland China firms listed in Hong Kong, rose 6.5 per cent.
These were way ahead of developed market performances. Europe's Stoxx 600 index had a 3.2 per cent first-quarter return while the S&P 500 in the United States had only 1.9 per cent.
Investment sentiment in Asia was lifted by improving economic data that suggests a brighter corporate outlook, Mr Chan said, adding: "With economic stabilisation in China, we expect Asian economies and markets to continue their gradual recovery this year, benefiting asset markets in the region."
This backdrop helped the Threadneedle Developed Asia Growth and Income fund return 15.02 per cent in the first quarter while the BGF Asian Dragon Fund was up 14.07 per cent, just ahead of the BGF China Fund, which added a 13.84 per cent return.
These three funds are hedged to the Australian dollar and had also benefited from the 2.3 per cent increase in the Australian-Singapore exchange rate.
Meanwhile, energy and commodity equities have been wobbling, reflecting the still lacklustre crude oil prices. Little surprise then that equity funds in this area were in a sea of red. The BGF World Energy Fund was the worst performer on Fundsupermart's platform, reporting a 9.79 per cent loss.
The Parvest Equity World Energy Classic fund lost 9.6 per cent, and the United Global Resources Fund pared 5.74 per cent.
"Soft-commodity prices also saw some weakness in the first quarter, which consequently weighed on the equity prices of agriculture-related companies," Mr Chan said.
As a result, the BGF World Agriculture Fund chalked up a 3.55 per cent loss, followed by the Allianz Global Agricultural Trend fund with a 3.11 per cent loss.
Given the pockets of uncertainties, investors should diversify their portfolio, Mr Chan stressed, but Asia ex-Japan equities outlook remains bright even after the build-up in the first quarter.
"Valuation multiples still remain attractive on aggregate, and we expect a continued and gradual recovery in corporate earnings to support equity market gains moving forward," he added.
"We remain positive on the region and reiterate our preference for Asia ex-Japan vis-a-vis the Western developed markets of Europe and the US."
The top performing fixed-income funds in the first quarter were also mostly in emerging markets, as well as those hedged to the Australian currency.
The Allianz Dynamic Asian High Yield Bond fund was the best of the crop. The Aussie-hedged fund dished out a 7.51 per cent return, followed by the Pimco Emerging Market Bond fund, which gained 6.61 per cent.
The weakness of the US dollar in the first quarter was a strain on funds hedged to the greenback. For instance, the BNP Paribas Flexi I US Mortgage Classic fund lost 3.14 per cent while the Eastspring Investments - US High Investment Grade Bond fund had a 2.8 per cent loss.
Mr Chan advised investors to take a defensive stance with fixed- income investments, with a focus on the less risky short-term bonds with decent yields.
"We would like to reiterate the fact that the fixed-income portion of one's portfolio is meant to be a stabiliser," he said.