As members of the public develop a better understanding of wealth management products, they are increasingly turning to established funds for stable returns on their investments.
Although the dynamic Hong Kong stock market is performing well, reflecting the fact that locals are turning to pragmatic investment strategies in their quest for better returns, investment funds are becoming ever more popular investment tools.
Steve Chiu, head of retail business, Asia ex Japan, INVESCO Hong Kong Limited says, "The booming stock market is not posing a threat to the fund investment market. In fact, it will fuel it. There is room for the Hong Kong investment fund market to grow when compared with the European and US markets, where most investors are already using such funds for long-term wealth management."
While Hong Kong people tend to invest in the stock market, Mr Chiu believes that this does not mean they would not also embrace investment funds as an alternative, more stable investment tool, providing longer-term security.
"Particularly as the public gets to know the products on offer, they are becoming more accepting of this tool," he adds.
INVESCO is an established international investment fund house offering a range of diversified products, including the Asia Infrastructure Fund (its most popular offering) and its Global Landmark Income Fund. While the former captures the strong capital growth potential of the infrastructure- related sectors across Asia, the latter helps investors achieve long-term capital appreciation by investing in a diversified portfolio of securities engaged in the real estate sector worldwide. In order to cater to market needs, the company usually releases at least one or two new products every year, says Mr Chiu.
INVESCO uses banking institutions, insurance companies and independent investment consultants as its intermediaries to market investment products to clients. To help clients make appropriate investment choices in an ever-changing environment, good and fast communication between intermediaries and the company are important.
"When choosing an investment fund, most clients look for good returns and it concerns them if constant changes affect their returns, so our role is to collect and consolidate our fund managers' insight into the market and their investment strategies through a range of communication tools for our intermediaries, who are then in a position to accurately advise clients," Mr Chiu remarks.
While it is easy to obtain the latest market information in Hong Kong, many local investors are not yet equipped to interpret market information without professional assistance, which is why the intermediaries play a crucial role in relaying market information from the company to clients.
INVESCO has therefore concentrated on building good communication channels with both its intermediaries and the media as part of its information service to the public.
"For example, the sub-prime mortgage crisis in the US recently caused a stir in the market. We responded to the market changes by collecting the views of our fund managers and economists for our intermediaries, in order to explain the risks and opportunities to clients," notes Mr Chiu.
A number of mandatory provident fund (MPF) service providers recently reduced their administrative fees in the scramble for a bigger portion of the market share. Mr Chiu says lower fees would not generally be a major consideration for clients when choosing a retail investment fund. Instead, they would compare the differences in returns offered by funds and after-sales services.
Looking at future challenges for the investment fund market, Mr Chiu believes client education is a major and long-term concern. It is important to change people's mindsets when it comes to planning their investment portfolios, which are often too clustered and limited, he feels.
"Many investors are too focused on one single investment tool. Although it may have a positive outlook and yield good returns, the market is always changing and the outlook could easily change in future, limiting returns and triggering investment risks," he concludes.