Mutual funds registered for sale in Thailand posted an average gain of 4.28% in April, bringing the total return for the January to April period to 4.24%, according to data from Lipper.

Equity funds outperformed all other asset classes in April, with an average gain of 12.05%. All fund groups were in positive territory in April.

"The market appears to be moving based on the key factor of risk and how much the market is willing to price it," says Ivan Ng, a Singapore-based research analyst for Asean at Lipper. "Some of the worst performing sectors were given a breath of fresh air and were seemingly brought back from the dead."

Sectors such as equity emerging markets Europe, equity Asia-Pacific small- and mid-cap, and equity Thailand turned in performances of 21.09%, 18.86% and 12.84%, respectively, for April.

The three top-performing equity funds in April were Manulife Strength-Emerging Markets (up 21.09%), Energy and Petrochemical Index (up 19.45%), and Tisco Equity Growth (up 19.39%).

Bond funds were nearly flat, posting an average gain of just 0.14% in April. The three top-performing bond funds were AYF Fixed Income Plus 18M2 (up 8.13%), K Global Emerging Market Bond (up 8.06%), and AYF Fixed Income Plus 12M6 (up 8.04%).

Thirty new funds were launched in Thailand in April, according to Lipper. More than half the funds launched in April invest in Korean government bonds and money market securities. Year-to-date, most of the new fund launches have been bond and money market funds, many of which mature within six months to a year, which keeps the industry active as similar products are launched to replace the ones that have matured.

"To most market observers the big picture is quite simple -- equity markets needed a reason to rally, considering how far they had plunged from their peaks," says Ng. "The focus throughout the last few weeks has been on how economic data have shown the pace of decline slowing and how markets going forward from here appear to be evenly split between the bulls and the bears."

One camp of investors claims markets are forward-looking and the economic cycle is bottoming, if it hasn't already, while the pessimists continue to claim that the future continues to be murky, that the trough in the economy has not been reached and that credit problems have not been entirely fixed even with the massive amounts of liquidity created by central banks, Ng says.

The main problem for portfolio managers is that they have had to jump back into the markets or risk underperforming their benchmarks, assuming this rally still has legs to run, and this has led to the further propulsion of equity prices upward, creating somewhat of a positive feedback cycle, Ng adds.