Higher dividend yields and lower stock price-to-book-value ratios are just a few of the temptations that await investors who stray east, into what used to be forbidden territory.

Mr Pollen, a graduate of King's College, London, who began his career with Barings Asset Management in 1982, says a key attraction of Europe's emerging markets is their strong economic growth. 'Emerging markets in Eastern Europe, particularly Russia, have been performing better than the United States and mainland Europe thanks to surging oil and commodities prices,' he says.

'We are looking, but we can't see any major potential for economic disasters in Asia, Eastern Europe or Latin America,' he added.

There is always an unexpected event that could trip up Europe's emerging economies. A sharp rise in global interest rates is one and a slump in demand for commodities another. On the other hand, if the US dollar remained close to its present level, that would benefit Europe's emerging markets.

Last year the gross domestic product of the 'Baltic tigers' - Latvia, Lithuania and Estonia - grew by between 6 and 8 per cent. This has been underpinned by widespread deregulation and structural reforms among those countries that joined the European Union (EU) in May last year. This in turn has helped to lower inflation and interest rates and stimulated domestic consumption.

Mr Pollen says that on present trends he expects Eastern European equities to continue their outperformance against major world equity and bond indices over the medium to long term.

He says Russia and Turkey are expected to grow by 6.6 per cent and 5 per cent respectively this year. In addition, economic convergence between Poland, Hungary and the Czech Republic and the EU will continue to be a long-term driver of growth.

This is in spite of Hungary's frighteningly large current-account deficit and its reliance on short-term capital inflows.

'Hungary's currency, the forint, looks overvalued but equities are on reasonable valuations and Hungarian companies generally have highly regarded management teams that run companies that attract attention,' Mr Pollen says.

Among Mr Pollen's top picks are MOL Danube Refinery and Hungary's OTP bank, which both feature in Pioneer's Eastern European Equity fund. The fund also has an interest in Polish refining company PKN Orlen, a darling of western investors that has done twice as well as the main Warsaw index over the past five years.

He says a key theme of the Pioneer portfolio is a focus on companies positioned to meet still unsatisfied consumer demand stemming from the effects of decades of centralised economic planning throughout Eastern Europe.

Central and Eastern Europe have a GDP per capita nearly four times larger than China. Russia, Turkey, Poland, the Czech Republic and Hungary alone represent almost US$1 trillion in GDP annually. Countries have also begun to emerge with specialty industries. The Czech Republic and Slovakia have become centres for motor vehicle production, Poland for white goods and Turkey for car parts.

For investors who want to gain exposure to Europe's emerging markets there are a variety of specialist funds including those which invest in single countries.

Mr Pollen suggests that for private investors a diversified fund that includes different countries and sectors is the best bet. 'They provide a wider spread of risk, which is particularly necessary with this type of investment,' he says. 'They also enable the fund manager to shift the balance as the various markets go in and out of favour.

'Once we are happy with the macro we go hunting for companies where we see more than 20 per cent upside.'

He says corporate governance has been improving. 'As the markets develop and institutions pour more money in, there is growing pressure on them to conform to globally unified rules,' he says.