Hong Kong investors have a reputation for their gung-ho attitude to the business of investing in equity, but John Snelgrove, general manager of corporate affairs for National Mutual Asia, believes the reputation is certainly undeserved when it comes to pension fund investments. 'People have generally adopted a relatively conservative approach to their long-term savings,' he said. 'Pension funds are long-term investments and people look at them in a very different way to the way they look at stock market investments. They regard their retirement funds as sacrosanct.' Mr Snelgrove finds Hong Kong clients of National Mutual's provident funds are not in an all-out search for maximum returns; when it comes to insurance and retirement, they are looking for security. For this reason, he believes that, despite the numerous horror stories circulating around the SAR about the amount of money investors lost last month, pension money has weathered the storm of the Asian currency crisis rather well. The amount of pension money Hong Kong people have exposed to volatile markets, when compared to some other markets in the world, is actually quite small. So, the effect that any short- term volatility had on the retirement market was minimal, he said. 'Of course, if you are unlucky enough to have reached the expiry of your retirement funds at the nadir of the market, you could stand to lose substantially.' He said National Mutual had a facility whereby retirees could leave their money in the fund under a continuation option until a more convenient time. 'Even in the worst case scenario where they are invested in an aggressive fund and are unlucky enough to retire on the day, for example, that Saddam Hussein invades Kuwait, they are not punished.' He added that the damage of market swings, such as those which affected most markets last month, was diminished with regard to pension fund money since most contributions into retirement schemes came in the form of monthly payments. 'If you put $100,000 cash into stocks in one go, it matters greatly if you buy at a time of high or low share prices. If, in contrast, you buy those shares in instalments over several years, there will be an averaging effect,' he said. 'Over a period of time, even if you are in non-guaranteed funds, you benefit from the effect of the averaging out of the price at which you buy the investments.' He said a fall in the market actually allowed investors to buy more units so in the end that could work to their advantage. There are other mechanisms designed to increase the security of provident funds. National Mutual suggests account holders should consider switching their retirement investments into vehicles offering maximum security for four to five years before retirement. Various guaranteed funds in the Hong Kong market have increased in popularity as a result of the current market volatility. In 'deposit administration funds', the investment risk is borne by the insurance company or bank offering the scheme rather than the individual. Some guaranteed funds offer the soft guarantee of refunding investors' money if the investments do not generate profit. Others offer the hard guarantee of, for example, 5 per cent interest a year.