DESPITE a robust rebound last month, both Hong Kong equity and China funds were among the sectors that registered the greatest downward adjustments this year, according to the Hong Kong Investment Funds Association (HKIFA). The rebound last month boosted their respective annual returns to about 33 per cent. Asia-Pacific equity funds continued to dominate the top 10 sectors, with the majority posting an annual return of 30 to 40 per cent. But most of the Asian funds have witnessed a downward adjustment in the first seven months. The country funds in general faced negative growth rates of 15 to 25 per cent while the adjustment for regional funds was marginally smaller. Reviewing the performance of funds, Mr Richard Haw, chairman of the HKIFA, said: ''In the first half of this year, due to market consolidation, most of the funds, in particular the Asian funds, registered negative growth rates. ''However, the performance table indicates that the downward pressure has tapered off,'' he said, adding that at the beginning of the year, the negative adjustment was across the board. However, since April a mixed result has emerged with some fund sectors recovering faster than others. ''In July, we have for the first time in this year, seen all the top 15 sectors registering positive returns in a month,'' said Mr Haw. Thai equity funds ranked as the top performing sector last month with an annual return of 71.2 per cent, according to a HKIFA performance survey, ranked on a year-on-year return. Not only has the Thai sector topped the fund performance table for four consecutive months, but it has also consistently outperformed the second leading sector by 20 to 30 per cent. The Singapore and Malaysian equity sector stayed in second place with a return of 42.08 per cent, followed by the Asian equity sector with a return of 38.05 per cent. This sector excludes Japan but includes Hong Kong. Since March this year, European funds had been able to break the dominance of Asian funds in the top 15. With an average annual return of 20 to 30 per cent, they have consistently taken up the lower end of the top 15 places. The European sectors were among the few fund sectors that registered positive returns - though modest - this year. As to whether this kicks off the upward trend, Mr Haw said: ''We are pleased to note the positive signs. However, the interest rate factor is most likely to continue to have an impact on the markets, though to a lesser degree than the first half of the year.'' The association is optimistic as Europe, Japan and the United States are showing signs of economic growth. On the individual fund ranking table, INVESCO Asia Tiger Warrant came first with 113.43 per cent. It was followed by JF Thailand and Fidelity Funds Thailand which posted a return of 91.25 per cent and 82.50 per cent respectively. The others in the top 15 also managed to post a return of over 60 per cent.