Investment funds with a focus on smaller firms provided investors with the best returns in the 2010/11 tax year, it has been revealed.
Investors who placed their faith in funds from the UK smaller companies sector will have had the most to be happy about, after Hargreaves Lansdown revealed the sector enjoyed growth of almost 28% in the last tax year.
Funds with a focus on smaller firms in North America were the second best performers, delivering an average return of almost 19%, while the European smaller companies sector was just a short distance behind.
The triumph of smaller firms in the UK is likely to come as a surprise to many investors given the difficult times the economy has experienced over the past year.
However, Danny Cox, head of advice at the investment group, said the success of UK smaller companies funds demonstrates that stock markets and the economy are not the same thing.
"Despite the public sector cuts and austerity measures, many companies in the UK are well positioned, profitable and able to benefit from this private sector and export lead recovery," he added.
At the other end of the scale, investors who entrusted their money to Japan funds are likely to have been left disappointed.
The sector reported an average loss of 8.5%, while funds focused on smaller firms from the region lost an average of 5.25%.
Unsurprisingly, money market funds also failed to impress, returning just 0.2% as interest rates remained historically low.
"It is hardly a surprise that Japan is propping up the performance tables after the recent natural disasters or that money market funds have barely produced a positive return," said investment manager Ben Yearsley.
"Over the long term we expect Japan to recover though in the short term there remains some uncertainty.
"Money market funds will remain unattractive while interest rates remain at this level."
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