Its top holdings included companies in Russia and South Korea, two markets that set record-breaking performances in the past year, as well as Brazil and Taiwan.

The Japanese Equity Fund, which last year rode the strongest rally in the Japanese stock market since 1986, made a cumulative return of 122.4 per cent in the past three calendar years. Unlike its emerging markets counterpart, it roundly beat its benchmark, the MSCI Japan Index, which gained 97.7 per cent over the same period.

Binay Chandgothia, chief investment officer of Principal Asset Management (Asia), said the success of the funds was predicated on a steady, disciplined approach to investment management.

'The funds have been successful due to the disciplined approach adopted by our investment team in managing the portfolios. Stock selection is the key to long-term investment performance and the Principal Global Investor [investment] process is geared towards identifying 'winners' in this regard,' said Mr Chandgothia, who has 12 years' experience in investment management.

If there is a 'Principal approach' to investment management, Mr Chandgothia said it was based, like many asset management firms, on a bottom-up approach. This means focusing on researching the fundamental strengths of individual companies and evaluating them based on industry considerations, competitive strengths and market outlook, with the ultimate aim of identifying value.

'Principal Global Investors focuses on four critical drivers of stock performance: improving business fundamentals, the sustainability of these business fundamentals, rising investor expectations and attractive relative valuation. The goal is to maximise global information advantages and neutralise unintended portfolio risks.'

Mr Chandgothia said Principal employed a unique and powerful research process which combined the fundamental research and what he referred to as 'systematic disciplines'.

The foundation of this research process was the group's 'integrated global research platform', which consisted of complex stock evaluation tools from many of the world's most sophisticated and highly specialised independent research providers, he said.

'These inputs are combined in a proprietary and highly customised data management and screening framework, providing real time breadth of coverage and peer rankings encompassing more than 10,000 companies around the world,' he said of the group's number-crunching power.

'Managing money is a challenging business, especially in markets that are getting increasingly volatile. Portfolio managers have to contend with cyclicality in performance all the time,' said Mr Chandgothia.