More than half of the top 20 funds had cash invested in the two economic powerhouses, according to Singapore-based unit trust distributor Fundsupermart.

And for those keeping score, most of the worst-performing funds were heavily into Japanese shares.

The top dog for 2007 was HGIF Indian Equity-A fund with returns of 66.9 per cent, with DWS China Equity Fund Class A just behind on 64.9 per cent.

The average return of the top 20 funds was 51.5 per cent and that can be largely put down to the robust stock markets in India and China, where domestic demand and good corporate performances kept the pot boiling.

Indian shares shot up 54.9 per cent over the full year, while China equities as represented by the Hang Seng Mainland Composite Index surged 48 per cent.

Singapore's Straits Times Index rose 16.6 per cent, despite a turbulent second half.

The rise of India and China has been the dominant story for the past four years. Indian funds took centre stage in 2004 and 2005, while it was China's turn in 2006. Both markets then put in a joint strong effort last year.

Now, investors are wondering if they should stick with their India and China funds.

'We think the India market is not attractive now because the market is expensive relative to other Asian markets,' said Fundsupermart research manager Mah Ching Cheng.

In fact, India is Fundsupermart's least favourite Asian equity market for this year.

And Ms Mah expects investors who own Chinese equity funds to experience even greater volatility because the market rose so much last year.

However, she believes Chinese equities are still likely to show strong returns and urged investors with substantial holdings in Chinese shares to rebalance their portfolios in order to keep their exposure at more reasonable levels.

OCBC Bank's vice-president of group wealth management, Mr Vasu Menon, advised investors to be sure not to put too many eggs in one basket.

He believes that China offers exciting growth prospects and investors with the risk appetite should consider shares in the country.

'However, one should also bear in mind that China is a long- term story and suitable only for those with the stomach for volatility and a long-term investment horizon,' added Mr Menon.

'So go ahead and invest in China, but don't throw a large chunk of your investments into China equities, hoping to make quick and substantial gains.'

Commodities is one asset class that performed well last year. Rising oil prices helped propel funds like First State Global Resources to stellar returns of 47.3 per cent.

Mr Menon's tip is to invest in commodities within the context of a diversified portfolio.

It was not all India and China last year. Funds investing in Brazil and the Asia-Pacific excluding Japan also performed well.

As for the losers, out of the 10 worst-performing funds, half were invested in Japanese equities. However, the biggest dud was Henderson European Property Securities, which lost 31.3 per cent over the year.

Just slightly better off was Pru Japan Smaller Companies Fund and M&G Jap Smaller Companies Fund.

lorna@sph.com.sg