PrepLicense: HK SFC · Study notes · Paper 12

SFC LE Paper 12: Asset Management

Paper 12 covers asset management in practice: fund types, investment strategies, operations and distribution, performance and fees.

資產管理 · 40 questions / 60 min · 70% to pass

1. The Hong Kong fund management industry

Know how the industry divides up: fund manager, trustee/depositary, administrator, distributor and investor each carry distinct roles and duties.

2. Major types of managed funds

The legal difference between unit trusts and mutual funds, the subscription/redemption mechanics of open- and closed-ended vehicles, and the characteristics of hedge and private funds.

3. ETFs and listed funds

ETF in-kind and cash creation/redemption, the role of participating dealers, and the sources of tracking error and premium/discount.

4. Investment strategy

Active versus passive management, benchmark selection, and the requirement that strategy stay within the investment mandate.

5. Mandate and investment restrictions

The mandate defines permitted assets, concentration limits and leverage constraints. Exceeding it is a breach even where the outcome is favourable.

6. Valuation and pricing

The basis for net asset value, pricing points, fair valuation procedures, and how pricing errors are corrected and compensated.

7. Fee structures

Management fees, performance fees including high-water marks, subscription and redemption charges, and ongoing charges — how they are calculated and disclosed.

8. Performance measurement

Understand benchmark-relative measurement, risk-adjusted return concepts, and the requirement that performance presentation not mislead.

Sources and how to use these notes

These notes are organised around the syllabus areas published by HKSI Institute and are conceptual summaries — use them to build a framework and to revise quickly before the exam. For specific provisions, numeric thresholds and question weightings, rely on the latest official HKSI study material and the SFC source texts.

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