The stockmarkets of China, Hong Kong and Taiwan developed in our view as a distinct geographic asset class in 1996, now being dubbed 'The Greater China Region'. This grouping was propelled by the rise in the markets, their increase in size and liquidity and the growing recognition of Hong Kong as part of China.

But most important of all was the increasing convergence of the drivers of performance. In the case of Taiwan, which is still very much following its own track, one estimate is that around 25% of the stockmarket could be seen as 'a China play'. In Hong Kong it was the em-ergence on the stock exchange of the 'red chips', which are mainland China owned and controlled companies. These have done very well due mainly to the injection of their undervalued earnings-enhancing Chinese assets. Though, how far the exposure they give to China justifies the speculative heights they reached is a moot point.

As the three markets converge, the China story becomes increasingly difficult to ignore for pension fund managers looking to diversify overseas. The country first captured investors' interest in 1993 amid widening recognition of the immense achievements of Deng Xiaping's quasi-capitalist econom-ic miracle. With growth averaging 10% a year for the past 18 years, China has become the world's largest economy in terms of purchasing power parity and is a major driving force for the economies of the region, with growing economic and trade integration.

There are now over 170 funds managing $18bn in the Greater China Region. These funds break down into: Greater China 56; Pure China 17, Direct China 9, Taiwan 58 (targeted at foreign investors) and Hong Kong 31.We have found that the strategies adopted by the different fund managers in defining their China universe had a key im-pact on relative rankings and produced a wide performance disparity between the different funds.

Thirty three funds from this universe were interviewed following a quantitative screening for consistent performance over a discrete number of periods. The groups that achieved our ratings included: HSBC, Schroders, Nicholas Applegate, Eaton Vance/ Lloyd George, Kwang Hua Securities, ING Baring Private Equity, Invesco, Morgan Grenfell, Nation-al Investment Trust, China Securities Investment Trust Corporation, Dresdner Thornton, BGI, Fidelity, LGT, Indosuez and Fleming S&P. Other groups which also have dedicated resources to the region and are worthy of consideration include Guinness Flight Hambro, Jardine Fleming and Templeton.

Nigel Slade is a director, Standard & Poor's Fund Research in London