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Julian Gibbs

Very often, last year&#39s worst performing sectors become this year&#39s winners. The worst performer in 2001 was technology, with the average unit trust being down by 47 per cent at the beginning of December. European technology shares were particularly badly hit.

While technology shares will continue to remain volatile, there are now some bargains which the best fund managers should be able to pick.

Aberdeen European technology fell by 54 per cent over the last year but I believe it will recover strongly, as will Alan Torry&#39s SocGen technology fund. Aberdeen technology and Henderson global technology should also be in the forefront of any recovery.

European smaller company trusts fell on average by 34 per cent last year, mainly because many were invested in technology shares. This year, I particularly like the prospects for M&G European smaller companies and Henderson European smaller companies.

There have been many false dawns in Japan and the recession there is fairly severe. But all bad things come to an end and I expect Japan to recover.

Again, Japanese smaller companies may be the best answer because, despite the heavy fall last year, they are still up by 65 per cent over the last three years. Here, I like Baillie Gifford Japan smaller companies and Invesco Perpetual Japanese smaller companies, while Martin Currie Japan has been a consistent top performer.

My last tip, and possibly the best one, is for European high-yield bond funds, especially if purchased through a Pep transfer or an Isa. These are yielding over 11 per cent and should recover strongly later this year as default rates fall and the euro strengthens against the pound.

Happy investing. May all of you and your clients be winners.


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