The existence of a substantial mandatory pension scheme industry in Singapore supports the view that there is sufficient expertise to justify the use of a local firm in the management of Singapore exposure.

Many of the larger locally authorised unit trust managers, such as UOB, DBS, OCBC, Nikko and Schroders, provide a choice of CPF-approved funds and less restricted regional equity and bond funds. They would not win much business based on the performance of their CPF funds, but that is due to the limitations on CPF portfolios and lacklustre market performance. Deputy prime minister Lee Hsien Loong recently announced plans to revise the CPF investment guidelines to allow diversification.

International firms such as Citicorp, Rothschilds and Henderson have established operations in Singapore in anticipation of CPF or government mandates. Templeton, Rothschilds and Govetts have been successful in marketing international portfolio funds in the retail market.

Offshore funds focused on Singapore equities include offerings from Barclays, Nikko, HSBC, Fidelity and Thornton. It is worth checking the performance tables because some of these funds have shown quite wide swings, and certainly there is a wide disparity between the individual funds.

Studies by UK-based fund analysts, Forsyth & Partners shows that for south-east Asian managers, the average weighting towards Singapore is increasing. In March, Mercury increased exposure to Singapore from zero to 11%, which is the average weighting for the sector. Notable above-average weightings include Julius Baer Pacific Stock Fund (18.4%), Nicholas-Applegate Asia Pacific Growth (19.2%) and GAM Asian (21.4%).

Amid the continuing turmoil in Asian markets, Forsyth notes that fund managers are preoccupied with identifying 'the survivors' which have sufficiently strong asset bases and free cash flow to weather these conditions. Singapore, along with Hong Kong and Taiwan, is favoured.

The portfolio construction of GAM Asian draws minimal reference to the country allocation of the benchmark index, hence the overweight position.

The team attempts to identify markets where earnings expectations are low but where GAM believes there is potential for a profits increase.

Peter Eadon-Clarke of GT, who manages the Julius Baer Pacific Stock Fund, favours Singapore given its stronger fundamentals and relatively stable political situation. He favours selected banking, property and industry stocks.

One man who doesn't rate Singapore is Daniel Lian, head of investment research at ANZ Investment Management. I do not believe eq-uity markets in the region can return investors 40% in US dollar terms over the next two years, which is the minimum return we are looking for."

Singapore-based Lian is ad-viser to the new Guernsey-in-corporated ANZ Asian Re-covery Fund, targeted at in-stitutional investors. While the fund can invest up to one third in equities, Lian expects to put more into corporate bonds and currencies: "We expect to conduct a short yen, long Asian currencies strategy." Richard Newell"