Mutual funds in South Korea outperformed those of all their Asian neighbors just one month after finishing dead last, according to data released by research firm Lipper.

The news was not as good for funds centered on Indonesia, which lost an average of 2.7% due to political turmoil surrounding the country's presidential election. In July, Indonesian-steered funds were Asia's top dog.

When the Bank of Korea cut a key rate by a quarter of a point in mid-August, its stocks were boosted, thus paving the way for a solid August. The funds gained an average of 7.4% for the month, although they still fell short of the 9.3% benchmark stock index.

To say South Korean funds bounced back would be an understatement. They were the worst among the Asian markets during July, posting losses of an average of 5.9%. Second best in Asia was Taiwan at 4.2%, while other losers included Thailand and Malaysia, which each lost an average of 1.3%.

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