The Best and the Worst: Unit trusts

A MONTH is too short a time to make a sensible judgement about investment performance but it's enough for a timely lesson on the risks of volatile markets.

Funds invested in Latin America have done extremely well until recently, but last month brought distress for investors in Providence Capitol Latin American Companies.

Alan Parsonson, managing director of Providence Capitol Fund Managers, says the markets of Venezuela, Argentina and Brazil are 'over- bought', and admits that 'we think things are going to be difficult in Latin America for a while'.

So why did the fund managers not move into cash when the markets started to look expensive? 'We hold a maximum of 10 per cent cash in any of our funds at one time. We feel our unit holders prefer to be fully invested,' said Mr Parsonson.

Thailand's stock market has been recovering from the country's political upheaval earlier this year, so providing a boost to Providence Capitol's Thailand fund.

GT's Korean Securities Fund is a new one which specialises in smaller Korean companies, prices of which have tumbled after sharp rises when the Korean stock market was liberalised.

The range of futures funds launched by John Govett last December is performing as expected, according to Adam Parkin, a director of the company. The Bear funds use futures to make gains when the underlying shares in markets are falling, so it is no surprise to see the Japan Bear fund at the top of last month's performance tree.

Govett's Bear funds are clearly not the place to have money when markets are rising, but they have mirror images in a range of funds which track market indices. Ideally investors switch into these when they expect markets to turn up.

--------------------------------------------------------------------- UNIT TRUSTS --------------------------------------------------------------------- The best 1 Govett MIS Japan Bear 111.81 2 Govett MIS UK Bear 109.20 3 Govett MIS European Bear 104.49 4 Prov Capitol Thailand 102.76 5 CU Preference Share 102.03 The worst 1358 Thornton American Smaller Co's 86.43 1359 Aetna Japan Growth 85.31 1360 Govett MIS Japan Index 84.23 1361 Prov Capitol Latin American Co's 83.95 1362 GT Korean Securities 79.82 --------------------------------------------------------------------- Result of pounds 100 invested over one month to 1 July 1992, offer-to- offer Source: Micropal ---------------------------------------------------------------------