Fund of the week: Big returns for the brave

Smaller companies funds have led the charge in the IMA Global Emerging Markets sector over the last year. This one is the best of the bunch, but its big returns come with a hefty dose of risk.

Smaller companies funds have "led the charge" in the IMA Global Emerging Markets sector over the last year, says Barney Hatt in Investment Week. The best of the bunch is JP Morgan's Emerging Markets Small Cap Fund. It returned 57.3% in the 12 months to 1 June.

Manager Greg Mattiko has been at the helm since its launch in November 2007. He believes JP Morgan's presence in emerging markets means he's "spoilt for choice with regards to the quality of information on a small-cap basis relative to my competitors". Two stocks that have helped drive the fund's success are Chinese consumer-related stocks Wumart and Trinity. "These stocks have done very well, partly because when we had the correction in 2008 a lot of these small-cap stocks particularly the ones listed in Hong Kong traded at very low valuations. So we added a lot of the high-quality names which we thought were unjustifiably sold off."

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