With more than 20 years' experience in the asset management field, Mr Parks has, however, learned to approach bull markets with caution. This led him to take a more cautious approach during the year, reducing his exposure to some of the region's more overpriced growth stories.

'Broadly speaking, we predicted the overall scenario that happened in 2006 correctly in terms of the global outlook and the impact that it would have on Asia. However, we were unwilling to pay excessive amounts for stocks where valuations were unreasonable,' he said.

The team, which manages the Invesco Asian Equity Fund from Henley in Britain, consists of four investment professionals with Mr Parks as lead manager.

The fund's portfolio managers, all ex-investment analysts, are expected to pitch in and take on company research duties themselves.

This, Mr Parks said, allowed the investment managers to develop a strong sense of ownership and a detailed understanding of the stocks held in portfolios, which enhanced their stock-picking capabilities.

The fund is run through a flexible investment approach, which seeks to achieve absolute returns rather than follow a benchmark. Portfolio construction is shaped by the team's understanding of the region's liquidity flows, combined with careful bottom-up stock selection to add value to the portfolio.

Mr Parks said the fund's top-down analysis was determined by two factors: overall Asian liquidity environment, which determined the weightings in the portfolio; and trends at the country and sector level and how they shaped the outlook for corporate earnings growth.

The team's assessment of these factors would be combined with market valuation analysis to determine the country and sector weightings in the portfolio.

The team's bottom-up process aims to create an intimate understanding of a target company's fundamentals, including its track record, growth potential, strategy and financial strength and to establish where market consensus may be wrong in its assessment of company prospects.

To achieve this, Mr Parks said, his team conducted more than 700 company meetings a year. The company also used brokerage research to establish consensus estimates for stocks.

'Our research is structured to give us a detailed understanding of a company's key historical and future business drivers, such as demand for its products, pricing power, market share trends, cash flow and management strategy. This enables us to form an opinion on a company's competitive position, its strategic advantages and disadvantages, and the quality of its management,' Mr Parks said.

Looking at the prospects for the region's stock markets this year, Mr Parks remains positive and expects Asian stocks to continue to deliver satisfactory returns.

Despite last year's run-up in the Asian market and 'pockets of overvaluation', he believed that regional stocks were not overvalued against their earnings forecasts for 2007 and 2008.

'Overall, we remain positive on the prospects for Asia in 2007. Exports are still growing, domestic demand is good and inflation is generally not a problem. Liquidity levels remain high and the region's ability to deliver relatively strong economic growth in comparison to other markets should sustain the strong capital inflows which Asian markets enjoyed in 2006,' he said.

Other positive news which heartened investors was the US Federal Reserve's sanguine assessment of the US economy. The US central bank indicated that it could deliver a soft landing for the US economy which would keep global demand steady, he added.

With strong liquidity in regional markets, Mr Parks expected to see greater 'sector rotation' in Asian markets, as investors shift funds into laggard sectors of stocks.

'The beginning of 2007 has already seen some sector rotation with Hong Kong property developers, which have lagged, [are] up strongly in January.'

The Invesco Asian equities team sees value in the Southeast Asian markets based on the view that 'domestic demand will grow from a low base, especially as interest rates are likely to fall with the easing of inflation'.

By contrast, the fund is underweight in South Korea, given the lacklustre outlook for the domestic economy, although the banking sector now looks undervalued. On other markets, like South Korea, which underperformed the region last year, including Thailand and Taiwan, Mr Parks said he was 'mindful'.

'We continue to focus on companies and sectors that will benefit from increased domestic demand, such as the infrastructure, property, banking and consumer sectors.

'The financial sector also continues to act as one of the best means of providing indirect exposure to increased levels of domestic consumption. We believe that domestic demand is becoming a sustainable and important growth driver for the region's economies,' he said.

From a long-term investment perspective, Mr Parks believed that Asian equities should be considered a bargain asset class given prevailing macroeconomic trends.

'The Asian region is, over time, reducing its dependence on the western world and replacing this driver with internally generated sources of growth.'