THE ability to pick and choose from the best fund managers that Hong Kong, indeed the world, can offer is the key to the success of PFC International Portfolio Managers, alias otherwise known as Matheson PFC. The group has developed an interesting niche in Hong Kong, being neither a pure fund manager nor a straight broker. Its operations lie somewhere in between, finding others to look after its funds or identifying new markets and lining up managers. So it was not wholly surprising for PFC's managing director Paul Tagg when it was awarded the best manager of small funds over one year. ''We are able to select funds we like the look of and put our significant funds into it,'' he said. ''By the same token, we can switch our funds if we are not happy with the way a trust is performing. ''It gives us flexibility.'' said Mr Tagg. PFC is more a complementary service than a rival to the fund houses in Hong Kong and spreads its significant pools of cash through a range of trusts both in Asian-based sectors and overseas. Its spread for the best small manager included a leveraged currency fund operated by Bank Nationale de Paris (BNP) and IFS, a Jardine Fleming dynamic markets Asia and other British-based UK-based operations. PFC looks for ''niches'' in which to invest but keeps its sights on the emerging markets of the region where it has historically invested about 70 per cent to 80 per cent of its funds. ''Our funds focus on the emerging markets but we will also invest in mature markets where there is a dynamic sector,'' Mr Tagg said. Warrants, particularly Japanese warrants, were the movers about two years ago, while privatisation stocks are becoming increasingly attractive as more state-owned industry, in many cases monopolies, are pushed out into the public sector around the world. Matheson also picked up the Sunday Morning Post Fund Manager of the Year award for emerging markets equity funds over one year. The fund, the Dynamic Markets Portfolio Fund, posted a return on investment of about 79 per cent, according to Millisis figures. Because emerging markets are still in their infancy, the award has not yet been extended to a three-year section. Emerging markets are, however, becoming increasingly popular with investors anxious to take advantage of some of the phenomenal growth seen in some of the markets. Emerging markets are not necessarily confined to the region, with east European bourses, such as Poland, climbing 1,000 per cent (correct) last year, although many of the biggest improvers have been from the Asian region. Mr Tagg described the performance of Matheson PFC as ''very satisfactory'' with funds under management increasing during the year by about 50 per cent. The group has also expanded its staff in Hong Kong, taking advantage of the upswing in investor interest. In September, Matheson moved into new premises but is close to reaching capacity and may soon be looking for more new offices. Meanwhile, the winner of the three-year was Morgan Grenfell Asset Management, whose funds were managed out of Singapore. Fidelity also enjoyed a strong year, picking up three awards. The Fidelity Funds Yen Bond, managed by Martin Wooller, won Bonds Funds (other) over one year, the European equities, excluding Britain, the UK over one year was won by Fidelity Funds Europe, while Fidelity Funds Malaysia, managed by Alan Liu, was awarded the Singapore/Malaysia Equity Funds over three years. Indosuez also picked up three awards - international managed funds over one and three years, managed by Marion Li, and international bond funds over one year.