While it is often convenient to package the emerging markets into easily digestible units - the Tiger economies, Latin America, Eastern Europe etc - investors are learning the hard way that the economies within these areas are by no means homogeneous. Regionally invested funds may balance out the differences and the risks, but for the brave investor, going the single country route can pay handsome dividends (or alternatively, result in disaster).

The numbers speak for themselves. In Asia, over the 18 months to 1 June, while the Taiwanese index was up 57%, Thailand was down almost the same percentage. In Latin America, Brazil was up 132%, while Chile was down 3%.

In Eastern Europe, if anything, the divergences were even greater. The markets that did well - notably Russia and Poland - did very, very well (up 334% and 209% respectively over the 18-month period). Then there was the Czech Republic: down 5% over the year and minus 23% from the start of this year.

As the performance figures show, investors opting for a single country Russian fund over the year to end-May can have no complaints. The average return of the 17 funds available was 273.5%, the sort of increase investors dream about but rarely achieve.

Nancy Curtin, emerging market chief at Barings, reckons that Russia was a pre-emerging market last year, but is now emerging. Despite the high returns, she still rates Russia as number one pick in Eastern Europe. The political risks have declined and the economy is much better," she says.

Reformers have been brought into the government and they are doing a good job in meeting IMF guidelines. Inflation is down and the "absurd" valuations of a year ago are now looking justified. Curtin admits that there are still tough battles ahead: "You are still walking a tightrope investing in Russia," she says, but she sees lots of profit potential to offset the high risks.

Regent Fund Management, with three funds in the top five, claim to have introduced the greatest number of investors into the hottest market of the past 18 months. The group actually has five Russian funds - three equity and two debt. The debt funds have been much less successful over the last year, compared to the equity vehicles which have invested largely in the liquid "blue chip" stocks.

The most successful individual fund however, was the Hermitage Fund, launched in April last year under the Republic Portfolio Selection Fund umbrella. Domiciled in Guernsey, the ultimate parent company is Republic New York Co and Safra Republic Holdings of South Africa.

Hungary, the second most successful market in Eastern Europe over the past 12 months, was skidding towards insolvency in 1995 when the government stepped in with a radical austerity plan. Over the past couple of years, the government has cut both the current account deficit and inflation. GDP growth, after slowing down in both 1995 and 1996, has shown signs of picking up, with first-quarter 1997 growth estimated at 7%.

The sector leader, Hungarian Investment Co, is part of the John Govett fund stable. Govett was one of the first groups to open up in Hungary, establishing this fund back in January 1991. Again, Hungarian debt funds have tended to trail equities badly.

The big disappointment in Eastern Europe has been the Czech Republic. Once considered the model for the region, it is now "a real sick case" according to Curtin.

Plagued by mounting trade and budget deficits, decreasing growth in productivity and weak regulation of the capital markets, the government was forced to introduce new austerity measures, including the recent devaluation of the koruna.

The privatisation process was not handled very well. Too many funds were created too quickly and several major frauds have undermined confidence in the market. As the statistics show, only one fund (the Czech Republic Fund) made any sort of profit over the one-year period, while the CF Czech Fund, a Luxembourg-based Sicav from the German CRM group, lost almost half its value over the 12 months and fared even worse over the three-year term.

Poland is the Eastern European market with rather more questionmarks over it than the others. Having taken a much slower pace towards privatisation, the stockmarket has had a good 18 (up almost 62%) but has fared rather worse since the start of the year (down 2% to 4 June).

Many investors have adopted a wait-and-see posture over the early months of this year, but there are signs that this may be changing. The reasons include better prospects emerging for reducing inflation to single digits, pressure on the state-owned commercial banks to restructure and good prospects for a fundamental overhaul of the pensions and social security systems.

Returns from the Polish market, as the four funds listed in the tables illustrate, have not really shown the typical emerging market pattern, being steady and consistent rather than volatile. The Boston-based Pioneer Group, with two out of the four equity funds plus a debt fund, invested in Poland, has a longer experience with the market than most.

David Hunt is a freelance journalist"