The Asia Pacific region can be more diverse than people realise. There are the emerging markets of China, India and Thailand, the developed economy of Japan, and somewhere in the middle is Australasia.

In terms of performance, the MSCI Australia and the MSCI New Zealand indices have both performed well in the longer term. For the five years to February 5 2014, both indices have outperformed the MSCI China, MSCI Japan, MSCI India and MSCI AC Asia indices.

The New Zealand index has returned 142.62 per cent in the period, with Australia slightly behind at 124.1 per cent – but both of these dwarf the returns of the next best performing of the six indices, the MSCI India at 69.01 per cent.

China, which is almost always seen as the growth place in Asia, is even further behind with a return of 50.26 per cent.

So why exactly has it done so well and what has been driving these returns?

Mike Kerley, manager of the Henderson Far East Income investment trust, says: “Traditionally the two big sectors in Australia are resources and banks, and then you have other stuff.

“Resources generally make up roughly 20-25 per cent of the market and banks are pretty much the same. But resources can make up to 30-40 per cent of the market depending on what resource prices are doing.”

The manager also points out an appealing feature of Australia and New Zealand is the yield for income investors. “Australia is one of the highest yielding markets in the world, if not the highest yielding market, with yields of more than 4 per cent.”

This tends to be driven by the non-resource side of the market such as banks, telecoms, and the property Reit (real estate investment trust) sector.

“Although Australia sits in Asia-Pacific it looks more like the UK or US than the rest of Asia. It’s gone through the same kind of housing boom, high wages, too much consumer debt and so on, which is a phenomenon of the western world, not Asia per se,” explains Mr Kerley. “So there is an adjustment taking place – but the advantage Australians have is the government doesn’t have a fiscal deficit.”

The strong resources sector in the country has also benefited from links to China during its recent growth phase, but as that slows down the commodity boost in Australia is also expected to fall away, with real GDP growth in the country falling from 3.7 per cent in 2012 to 2.5 per cent in 2013.

Meanwhile New Zealand, which has more of an agricultural commodity base than industrial commodities, has still seen real GDP growth fall from 3.2 per cent in 2012 to 2.3 per cent last year, according to the OECD.

Interestingly, of the top three funds over five years in the IMA Asia Pacific including Japan sector, two of them have at least 10 per cent of the portfolio in Australia. The £25.8m Smith & Williamson Far Eastern Income & Growth Trust, which topped the sector over five years to February 5 2014 with a return of 96.35 per cent, has Australia as its second highest country weighting, with 16.5 per cent of the portfolio.

However, the Baillie Gifford Developed Asia Pacific fund has the highest weighting to the country at 26.6 per cent of the portfolio, although of the eight funds in the sector only two hold a weighting to Australia and New Zealand combined of less than 10 per cent of the portfolio.

In addition, the funds in the IMA Asia Pacific including Japan sector outperformed the IMA Asia Pacific excluding Japan sector in 2013 by 8.52 percentage points, with an average return of 10.37 per cent.

This suggests that while the term Asia automatically throws up the usual suspects, it may pay to look a bit deeper and extend the remit to include the more developed countries in the region such as Japan, Australia and New Zealand to balance out the inherent emerging markets exposure.

Nyree Stewart is features editor at Investment Adviser