Mutual funds registered for sale in Singapore posted an average return of 0.51% in February, a turnaround from their average 7.7% loss in January, according to Lipper data.

Equity funds gained an average 1.01%, boosted by gains in natural resources (+9.57%) and gold (+10.04%) products. Taiwanese funds (+12.05%) outperformed other market-specific portfolios.

LipperÆs top-and-bottom fund scoreboard for February reflected the divergence in performance in the worldÆs stockmarkets during the month. Equity Taiwan offerings soared 12.05% to rank first among the fund sectors as investors bet on the positive growth outlook of the island and a favourable outcome in its presidential elections. Natural resources plays continued to hog the limelight as soaring oil, gold, and soft commodities prices drove related fund offerings higher. The niche grouping of commodities products placed second (+11.89%) on the back of the strong showing in several agricultural derivatives-related funds, while equity sector gold and precious metals offerings jumped 10.04% as spot gold prices leapt to $972.1 per troy ounce at the end of the month.

Specific funds investing in the emerging economies of Brazil (+10.74%) and Thailand (+9.23%) also outperformed on the back of improving market fundamentals, while regional portfolios such as equity emerging markets Latin America (+7.07%) as well as equity emerging markets other (+6.33%) similarly finished on the top-10 list.

Several Asia-based fund sectors, however, underperformed, particularly equity Philippines (-6.02%), equity India (-4.32%), and equity Malaysia (-3.16%).

On the local front, while SingaporeÆs non-oil domestic exports strengthened because of better regional performance in January, numbers are expected to be under pressure in the months ahead because of continued weakness in the electronics sector and external demand, says Kenneth Koh, Singapore-based head of research for Asia ex-Japan at Lipper.

Koh also notes that Singapore's inflation reached a 25-year high in January û the highest since March 1982 û with housing and food costs rising much faster than analysts predicted. The countryÆs consumer price index û a non-core measure of costs for goods and services û rose 6.6% from a year earlier after rising 4.4% in December.

The latest data prompted the government to raise its 2008 inflation forecast, creating a greater need for tight monetary policy.

The Monetary Authority of Singapore (MAS), which traditionally conducts monetary policy by guiding the Singapore dollar exchange rate, may allow the local currency to appreciate at a faster pace to curb imported inflation, but the current weakness in the global economy may restrain the MAS from further tightening, Koh says.

Average February performance of fund groups registered for sale in Singapore, by asset types:

Commodities +11.89%
Equity Funds +1.01%
Guaranteed Funds +0.75%
Hedge Funds +0.39%
Mixed-Asset Funds +0.14%
Money Market Funds -0.19%
Protected Funds -0.50%
Bond Funds -0.66%