Why Venezuela and Iran held the key to returns in 2011

Which markets fared best during a tumultuous year?

Hugo Chavez and Mahmoud Ahmadinejad may not strike investors as the most business-friendly politicians in the world, but rising inflation in Venezuela and a continued market boom in Iran meant those countries were home to two of the world's best performing stock markets in 2011.

Markets such as these, which could politely be described as underowned, dominate the list of best performing indices for 2011.

But thoughts of escaping the volatility that characterised 2011 by looking to far-flung corners of the globe were, unsurprisingly, misplaced.

For example, the Mongolian Stock Exchange index, the best performing index in the world in 2010, saw a horrifying 40% fall between February and May last year. And yet buy-and-hold investors in Mongolia (whomever they may be) were rewarded for their patience with a 32.6% return over the year as a whole.

The 10 best performing equity markets in 2011:

1. Venezuela Caracas Stock Exchange, up 80.8%

2. Mongolia Stock Exchange, up 32.6%

3. Panama General Index, up 29.2%

4. Tehran Stock Exchange, up 29.1%

5. Trinidad & Tobago Stock Exchange, up 19.3%

6. Jamaica Stock Exchange Market Index, up 12.8%

7. Tanzania Stock Exchange, up 12%

8. Botswana Gaborone Index, up 8.8%

9. US Dow Jones Industrial Average, up 6.3%

10. Philippines Stock Exchange, up 3.8%

 Source: Business Insider