Japanese, emerging market and Asia funds run by Aberdeen, Baillie Gifford and Invesco have all enjoyed strong returns so far in 2026, arresting poor long-term performance.
Six Japan funds, two Asia Pacific portfolios and three emerging market specialists made the list below, which highlights long-term laggards that have turned a corner in the past six months.
The best performing of the group below is the Allianz Little Dragons fund, managed by FE fundinfo Alpha Manager Yu Zhang. It invests in small and mid-sized companies across the Asia Pacific region and has flourished in the first half of 2026, up 54%.
Although it cannot own burgeoning names such as Taiwan's TSMC or Korea's SK Hynix, which have both rocketed during the AI boom, it has been overweight stocks in both countries, which have also benefited from the wave of money entering the countries.
China is the fund's largest country allocation (31.4%), closely followed by Taiwan (27%) and Korea (18.1%). Technology is the largest sector exposure, at just under half of the portfolio (48.8%).
Source: FE Analytics. All data to 30 June 2026.
In second place, PineBridge Asia ex Japan Equity has made 42.8% year-to-date. Managed by Caroline Loke, the fund is dominated by technology and includes some of the best-performing stocks in the latest wave of the AI trade.
Korean giants Samsung Electronics and SK Hynix are the largest two stocks, accounting for some 18.8% of the portfolio. TSMC is third at 8.9%. They are far and away the largest positions in the portfolio, with the fourth-largest company – Delta Electronics – a 3.4% position size.
Finally, looking more broadly, three emerging markets funds made the list. With the rise of Taiwan and Korea in recent months, Asia dominates the MSCI Emerging Markets index. The two countries make up more than half (51%) of the index, while China and India account for a further 30%.
Abrdn Emerging Markets Equity and abrdn SICAV I Emerging Markets Equity have been the best performers. With identical returns of 34.8% over the past six months, these sister funds are near identical to one another – however the former is an open-ended investment company (OEIC) while the other is a SICAV structure domiciled in Luxembourg.
Managed by the Aberdeen global emerging markets team, they look for high-quality companies that can be held for the long term. Top holdings include TSMC, Samsung and SK Hynix, with more than 30% of the funds in these three stocks at the end of May.
In the SICAV, the firm also states that the fund will use environmental, social and governance (ESG) screens to ensure that a minimum of 10% is invested in sustainable companies, although its top 10 remains the same as the OEIC.
They were joined by T. Rowe Price Emerging Markets Equity, which is just behind with a half-year return of 32.7%.
It is an Article 8 fund investing in companies with good environmental or social characteristics. Like everything else on this list, it is heavily invested in the 'big three' of Samsung, SK Hynix and TSMC, with the trio accounting for 29% of the portfolio.
Lastly, while looking at Asia Trustnet also considered Japanese funds. Here, six portfolios in the IA Japan sector are rebounding from a poor decade so far in 2026, with Invesco Japanese Smaller Companies (UK) the clear winner, up 35.3%.
This is the third-best performance in the sector during the period and reflects a trend of smaller companies catching up with their large-cap rivals so far this year. abrdn SICAV I Japanese Smaller Companies Sustainable Equity and Baillie Gifford Japanese Smaller Companies also made the list above.
Baillie Gifford’s fund has been particularly poor, returning just 39% over the past decade. Former manager Praveen Kumar was replaced by Brian Lum and Jared Anderson last year, with the duo also taking over the Shin Nippon trust.
The Japanese smaller companies funds used to have their own sector within the Investment Association, but this was closed in 2023 with the funds relocating to the IA Japan peer group.
They were joined on the list above by abrdn SICAV I Japanese Sustainable Equity, AXA Framlington Japan and abrdn Japanese Equity.
This is part of an ongoing series. Previously we have looked at the UK.