The term “asset allocation” may be the kind that causes your eyes to glaze over but it is much in the news these days.

In recent months several new funds have been launched with the express purpose of profiting from the effective channelling of money into different assets at different times.

Obviously this is a potentially high risk strategy as it could prove very costly to back the wrong asset at the wrong time.

But a glance at the latest fund performance tables from Investment Life & Pensions Moneyfacts shows a really dramatic difference between the returns which have been posted by different sectors of the market.

At one end of the scale funds investing in Japan and the US have, on average, lost 25 per cent of their value over 10 years - a truly horrendous result. Technology funds did even worse, losing nearly 50 per cent of their value. Mainstream UK equity funds also performed very poorly, producing an average loss of one per cent over the decade.

Equity income funds did slightly better, with a positive return of about 6 per cent while the various types of managed fund returned just over 10 per cent. European funds and corporate bond funds achieved a 20 per cent plus return.

But the real winners were funds investing in Asia, emerging markets and natural resources. Asian funds returned, on average, more than 80 per cent, while emerging markets funds more than doubled investors’ money. The handful of Latin American funds trebled or quadrupled investors’ original stake but the out and out winners were mining and resources funds. JPMorgan Natural Resources Fund achieved a fivefold increase in investors’ money while Black Rock Gold & General Fund turned an original stake of £1,000 into £6,800.

What these figures show is that although asset allocation might sound like a dry as dust technical term it can make a dramatic difference to the size of your nest-egg. Someone putting £20,000 into tech funds ten years ago would have seen the investment shrink to just over £10,000. In contrast someone who put the money into a natural resources fund would now be sitting on a lump sum of more than £100,000.

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