The Japanese have tended to opt for investment trust-style vehicles with limited units and limited lives, thus guaranteeing a regular supply of fund launches and marketing opportunities for fund managers.

Unit trusts have an unlimited number of units to offer unit holders and their lives are not pre-determined.

Depending on the wishes of the unit holders and the fund manager, a particular fund can extend its operations indefinitely.

For some time, it seemed that the Taiwan banking industry was about to take unit trusts to its heart, until tighter government restrictions killed a fund sales boom that reached US$750 million in 1990.

Hongkong saw a flurry of interest in the vehicle in the months leading to the October 1987 crash.

Since then, the interest of individual fund management groups in setting up in the territory and launching retail fund ranges probably has outstripped the demand from retail investors.

Despite the setback, the unit trust remains one of the most flexible investment vehicles for the retail investor, providing access to professional fund management across a broad range of investment sectors.

The unit trust basically offers a large number of individuals the opportunity to pool their money under a professional fund manager or fund management team.

In return, investors receive units, the value of which track closely the underlying value of the securities in which they have been invested.

The trusts come in sometimes confusing varieties but essentially they are pools of money, within some kind of protective legal framework, that are managed under professional guidance in a pre-determined investment.

They are confused sometimes with Western investment trusts, which are investment companies with a limited number of shares.

Unit trusts have no limit on shares in issue, meaning they generally trade at net asset value. Investment trusts can run to discounts or premiums on their net asset value because of the limit on the share issue.

Unit trusts can come in umbrella varieties, which are a collection of unit trusts under one legal arrangement, with each unit trust within the umbrella being a sub-fund.

There are two common vehicles of this sort, called UCITS and SICAVS - horrible-sounding acronyms born from the European harmonisation of financial services.

The Undertakings for Collective Investments in Transferable Securities was first allowed to be promoted in Europe in October 1990.

The Societe d'Investissement a Capital Variable is a French version of the same pan-European investment vehicle.

Instead of talking about units they talk about shares, but apart from the differences in jargon they operate in a similar fashion to unit trusts and mutual funds.

Dealing days, on which units or shares in these vehicles are transacted, differ from one company or fund to another.

Normally they trade daily or weekly with a specific day for weekly transactions and a set time by which a transaction order must be received for completion in that dealing period.

Be sure that a time quoted to you is Hongkong time or translated into local time, so you do not miss it.

Many unit trust vehicles are now trading on net asset value, which means you pay for any other charges as a separate fee.

Fees generally start at five per cent of the initial sum followed by 1.5 per cent a year in the case of equity and bond funds. For money market funds there is usually no front-end charge. Some specialist funds in derivatives have a performance levy on top of the charges already mentioned.

Most funds trade on bid and offer prices, the difference between each being the bid-offer spread, or front-end charge. Some companies charge a transaction levy in addition to the spread levy. Some funds also charge redemption fees on investors coming outof the fund.

The bid-offer spread is the difference between the price at which an investment can be bought - the offer - and the price at which it can be sold - the bid.

Many local investors find the apparently high charges associated with unit trusts a bit off-putting. However, an investment-linked insurance contract can cost more, but the charges are not disclosed so investors think they are getting a bargain.

When picking a fund manager, go for a reputable name with an established track record going back more than five years, with at least US$500 million under management in retail funds.

The individual fund you pick should have a minimum of US$5 million - anything less and the fund is not likely to be sustainable over the long term. Ideally the fund should have at least US$20 million in it.