In the past 12 months, £100 (R1,150) invested in the average emerging markets fund would have grown to £150 (R1,735). That £100 invested three years ago would now be worth almost double - £184 (R2,128).
By comparison, the average UK growth fund would have returned £123 (R1,423) over the past year and £146 (R1,689) over three years.
Attracted by a strong economy and stock market performance, almost all emerging markets funds have exposure to South Africa, typically five to 10% of the total fund value. The top-performing global emerging markets fund - from Aberdeen Asset Management - has 5.1% of its portfolio in South Africa.
The largest weightings in the fund, managed by Peter Hames in Singapore and Joanne Irvine in London, are Brazil and India, both at 14%, but other such funds have greater exposure to South Africa.
'There is no doubt that South Africa is firing on all cylinders,' says Neil Gregson, head of emerging markets at Credit Suisse Asset Management in London. He reckons an appropriate weighting for South Africa would be 10% of a portfolio.
He says: 'It is an economy demonstrating the classic attractive features of an emerging market with controlled inflation and rapid growth.' And he believes that South Africa has the lead on other emerging markets rivals. 'On average, South African companies are better run than many others,' he says.
'The country has an established, well-regulated stock market with a large array of listed companies to select from and superb banking and telecoms infrastructures. In many respects it has none of the trappings of a Third World country.'
Jeremy Gardiner, director of Investec Asset Management in Johannesburg, explains why he believes South Africa has moved up the agenda for investors in Europe and the USA.
'Last year marked the country's tenth anniversary of majority rule,' he says. 'That helped the world reconsider South Africa and realise the scale of the economic, social and political miracle that has taken place.
He adds: 'Ten years ago, the world looked at South Africa and thought it might slip into a drawn-out civil war . . . they thought it might become another Zimbabwe. But the truth is, corruption is under control, there is a free media and a rapidly growing middle class.'
By Richard Dyson, Mail on Sunday (UK)
This article was published on finance website www.thisismoney.co.uk as part of a special report on South Africa.
Other articles in the report:South Africa goes for gold
Mandela aide’s fast track to riches
Great paper chase pays dividends
