KEY POINTS:
Britain's largest mutual fund manager, Fidelity International, said in a report published today that investors had to go off the beaten track to places such as New Zealand to find the best performing markets.
None of the larger, more established markets featured at the top of its returns
table in the last decade.
"The UK, US and Japan were noticeably absent while the likes of Finland and New Zealand triumphed." said Fidelity's Jorma Korhonen.
He said emerging markets had been the best performing each year in the last decade, although the same country never topped the table in consecutive years.
But investors had to choose carefully as, using MSCI indices, the research show ed emerging markets also dominated the worst performers -- taking the bottom place in eight out of 10 years.
Although both New Zealand and Finland managed two consecutive years of top performance, they were the exception, and as with the emerging market winners, a number of the top-performing markets also made regular appearances at the bottom of the table.
Of the developed markets, Finland was the best performer in 1998 and 1999 returning 120.2 per cent and 161.5 per cent respectively. It was also the worst performer in 2001, 2003 and 2004.
Finland did, however, have the best cumulative performance of its peers (360.8 per cent) -- a good 100 per cent clear of its nearest rival, Spain, which returned 253.7 per cent.
Perhaps unsurprisingly, given the number of appearances the market made at both ends of the table, Finland was the most volatile of developed markets with an annualised standard deviation of 37.2 per cent. The least volatile developed market was the UK at just 13.7 per cent.
Russia, which was the best performer overall in 1996 and 2001 -- returning 129.5 per cent and 60 per cent in these years -- was also the worst-performing market in 1998, when investors lost nearly all their money (83.2 per cent).
It has also been the most volatile market over the decade (64.51 per cent annualised standard deviation).
However, if investors were prepared to put up with the rocky ride, Russia had the best cumulative performance overall, returning a staggering 1067.8 per cent, Mr Korhonen said.
When looking at emerging and developed markets as regions instead of single countries, the cumulative performance of the developed countries at 83 per cent out performed the cumulative returns of emerging markets (77.9 per cent) over the decade, with emerging markets only now getting back to where they were before the Asian and Russian crisis in the late 1990s.
Mr Korhonen said that countries that performed well one year could perform equally badly the next.
"Single country markets can be extremely volatile and it is extremely difficult, if not impossible, to predict which one will bring you the highest returns."
RESULTS
Best performing developing market
1996 Russia
1997 Turkey
1998 S Korea
1999 Turkey
2000 Israel
2001 Russia
2002 Pakistan
2003 Thailand
2004 Colombia
2005 Egypt
Best performing developed market
1996 Spain
1997 Portugal
1998 Finland
1999 Finland
2000 Switzerland
2001 New Zealand
2002 New Zealand
2003 Greece
2004 Austria
2005 Canada
Source: Fidelity International
- NZPA
