Emerging Market funds dominated the performance tables in the first two months of 2005 as the IMA Global Emerging Markets sector gained 10.16% so far this year. High beta and more volatile stocks also gained, as UK and European Smaller company categories performed well (8.78% and 7.05% respectively for the first two months).Overall, Baring Korea performed best in Jan/Feb gaining 17.56%. The best performing Global Growth fund for the year so far is Rathbone Global Opportunities, which has returned 10.11% for the year to date (4.31% in February) with much of the performance arising from its overweighting in Asian markets, 15.6% against the Global Growth index average of 7.2% exposure to the region. Jupiter Fund of Investment Trusts and First State Global Opportunities also had a good February, with gains in the First State fund coming from strong performance of some prominent holdings in the fund, most notably from Solarworld, a German solar panel manufacturer, which rose 36% in the month. In our regular asset allocation analysis, the most interesting movement in allocations came from the First State Global Opportunities fund, which has recently moved a large allocation away from North America, this was allocated to Asia Ex Japan. This now accounts for 62.90% of the portfolio, significantly overweight the 7.2% average weighting for the region in the sector. In addition, Gartmore Global Focus moved 10.25% of its portfolio into the American market, primarily from continental Europe (a reduction of 8.89%). Technology, telecoms and those biotech/healthcare funds continue to drag in performance terms and thus have affected some Global Growth funds as earnings forecasts paint an uncertain future. The Nasdaq is one of the worst performing major markets in America so far this year. From the start of 2005, the Nasdaq has lagged the S&P 500, falling 3.35% (in dollar terms, to March 7) while the S&P 500 is up 1.67%. Looking ahead, while high oil prices continue to depress major equity markets, Britain is gaining sentiment with managers. The FTSE 100 moved toward the 5,000 mark quickly into 2005, but has since dipped in recent weeks. Britain remains appealing as company earnings expectations look likely to be achieved this year. Some managers believe we are moving into a more prolonged opportunity period for British equities with current valuations looking attractive. The average cash exposure in the sector as of the end of February was 2.70%.