Recent jitters on the world's stock markets have done little for the nerves of those in the mutual fund business. An already competitive world has become even tougher now the run of soaring shares has faltered. Just ask Murray Simpson, managing director of Templeton Asia. Worldwide, Templeton deals with assets worth US$190 billion and it is the responsibility of investment agents to squeeze regular profits out of tricky markets. The Hong Kong office deals with emerging economies and is jointly responsible with Templeton in Singapore for funds worth US$12 billion. We asked Mr Simpson about current market conditions and how he saw the future. Q: How did the recent market plunge make your job more difficult? A: Any time the overall market falls it is harder to get good returns. But our job is to spot good companies which are strong. A time like this tests if we are making the right choices. Q: Why do a smaller percentage of people in Hong Kong invest in unit trusts than in the United States or Europe? A: It is hard to know exactly how many people in Hong Kong own unit trusts but surveys seem to place the amount between 3 and 8 per cent. The funds are relatively new here. In the United States, around 35 per cent of the population invests in unit trusts but 30 years ago the level was similar to what it is in Hong Kong now. Here, many people are still more interested in speculation than investment. Only the minority looks for ways to invest in the long term. But as the advantages of unit trusts become more widely known, it is likely that investment trends will change and the percentage of people entering funds will go up. Q: How can this process be encouraged? A: It is important for all unit trust companies to break down misconceptions by making clear through the media and advertising what unit trusts actually are. It is common for people to think they could lose all their money overnight or that the charges are very high. This could not be more wrong. In fact, charges often work out as less than if people had been doing their own trading. Q: What return do you hope for? A: Our benchmark is 15 per cent each year on average. This cannot be achieved every year but if a person keeps the investment for five to 10 years then that is the return they should be left with. Q: Will it be harder to hit this target in light of the recent instability in the world's markets? A: Investors must not panic and think that because the market has gone down for a while the world is coming to an end. In fact, it can ultimately be a good thing as the fall-back gives investors a chance to buy things at better prices. Over the last 100 years, history has shown that markets rise and fall but that at the end of any five-to-10-year period the market is at a higher level than it was at the start. That is why investors should think in the long term and not try to get out at the top or buy at the bottom. It is far harder to judge individual cycles than the overall upward trend. Q: What do you see happening to the Hong Kong market? A: Most commentators are confident it will keep going up but, at some point, there will have to be a correction. The question is when. The president of Templeton Emerging Markets Fund, Mark Mobius, says the Hang Seng index will reach 20,000. But this could be in five or even 10 years. Q: If you had $500,000 to invest, how would you do it? A: I would put half in global equity funds and a quarter in a high-yielding bond fund and then not think about that share of the money for a few years. The other 25 per cent I would keep liquid to be placed in promising sectors when the time looked right. I would do this however big the sum - it is exactly what I have already done with my own savings.