Investor education is the key to the unit trust industry making major inroads into the territory's savings, the general manager of Hongkong Bank says. Chris Langley said investors needed to be informed about the process of risk diversification and the relationship between risk and reward. Mr Langley, who was speaking at an Investment Funds Association luncheon, said social and economic factors were combining to bring about a transformation in the savings patterns in the territory. IFA members, including fund management groups, have about US$31 billion under management. The local industry accounts for about 3 per cent of the potential market and wants to lift its profile. Overseas unit trust and mutual fund markets have undergone quantum leaps as a result of tax incentives and pension plans. In Britain, the funds have been granted a tax-free status in personal equity plans, while in the United States the introduction of 401k pension plans has ignited the market. Mr Langley said a demographic bubble of well-educated, affluent '30-somethings' would boost the market. 'We are seeing a range of factors that will result in a change in financial expectations. Educated consumers are spreading their assets across a number of asset classes.' He said that while residential property would 'remain king', an extended period of low inflation combined with a slowdown in net yields from property would have investors seeking alternatives. The challenge for the industry would be to educate investors about asset diversification, risk and what to expect from different asset classes.