The investment knowledge level of the Hong Kong public is not bad, but “there is still much room for improvement”, says the Hong Kong Investment Funds Association, following the results of an online quiz on the industry, taken by over 1,000 members of the public.

The HKIFA held the competition in October and November last year order to raise awareness on investment knowledge and to understand the investment knowledge level of the public. Respondents were asked to answer 38 multiple choice questions covering equities, funds, bonds, derivatives, risk, regulatory and general investment knowledge.

“Hong Kong is an international finance centre. After many years of development, the local investment market has become very mature and diversified, and there are a wide range of investment products offered to the Hong Kong public,” said Bruno Lee, HKIFA Unit Trust Subcommittee chairman, in statement released last week.

“However, to achieve desirable investment returns, one should have good investment knowledge regardless of the type of investment products they invest in. The results of the HKIFA investment knowledge competition reflect that the investment knowledge level of HK people is not bad but there is still much room for improvement,” he continued.

Breakdown

The average score achieved on the test was around 60 per cent (22.6 correct answers out of 38 questions).

Out of all the respondents who completed the test (814 answered all questions), 60 per cent of them have invested in equities in the past three years, 33 per cent have invested in funds, and 20 per cent and 18 per cent invested in derivatives and bonds respectively. Their average score is 19 per cent higher than the non-invested contestants, indicating that investment experience can help to improve investment knowledge.

When analysed according to different age groups, the HKIFA observed that a higher ratio of the senior group has investment experience and their average scores were also better. The group aged 50 and above performed best (with an average score of 24.7). On the contrary, the group aged 18 to 20 displayed the worst results (average score of 20.4). This may be attributable to the lack of investment experience for this group of people, the HKIFA said.

Knowledge areas  

The performance of the contestants in different subject areas was relatively even with better results in the areas of risks and bonds. This may be due to the fact that the general awareness of investment risk has grown after the global financial crisis. And through the high profile issuance of bonds, and the rapid development of offshore renminbi bonds over the last few years, the public has become better informed about this asset class.

However, the competition results also show that there are some common misunderstandings about fund investment and the calculation of fund performance, for example.

Education

In the coming year, HKIFA said it will continue to advocate investor education and explain to the public how to make use of investment funds to achieve their financial goals. The body is looking at planning a number of studies, including the fund managers’ market outlook survey, retail investors’ behavior study and a research paper on how to promote personal retirement investment in Hong Kong. The results of these studies will be announced later this year. 

HKIFA is the professional body that represents the asset management industry in Hong Kong. As well as educating the public, it acts as the representative and consulting body for its members and the fund management industry generally, in all dealings concerning the regulation of unit trusts, mutual funds, retirement funds and other funds of a similar nature.