FOR 20 years, Peter Lord has been meaning to take a decent holiday. Now, he has his chance, heading off for a bit of English cricket and gardening. It wasn't planned quite that way, but the former head of LGT Asset Management's Hong Kong operations found the vacation open to him after the LGT group was taken over by Amvesco. His departure also means a premature end to his stint as chairman of the Investment Funds Association. If he has a valedictory message, it is that Hong Kong's investment professionals must face the challenge of educating the public in the ways of sensible portfolio-building. Ringing in his ears as he heads off this week almost certainly will be the sound of crashing share prices as the aftershocks of Asia's turmoil send new shudders through the markets. The effect on Hong Kong's unit-trust investors should not have to be a lesson learned twice, he says. That only 3.5 per cent of Hong Kong people invest in unit trusts is testament to the knowledge gap. In the United States, he says, about 40 per cent of people hold some kind of mutual fund, and in parts of Europe, the figure is a still-healthy 20 per cent or so. The learning curve might appear steep, given the savage way that years of gains were wiped out in just months, but that, Mr Lord says, was because investors took too big a punt on Asian markets. 'The main lesson that comes out of the past nine months is how to build a balanced portfolio. You should not be betting the farm on anything,' he says. 'If you look at broadly diversified global managed funds, they are all positive. I think if there is a silver lining to this turmoil, it is that it has underlined how a sensible diversification strategy can see you through even some pretty ghastly dips in the market,' he says. Investors need also to come to terms with benchmarking - that is, the measurement of fund performance against market indices or other baselines. 'Then, when people put their money in a Hong Kong fund and it goes down 20 per cent, they don't say 'you have lost me money'. Perhaps they say, 'the market was down 20 and you were down 15, you have done a good job'. Or 'you were down 30 per cent. Why?' ' Mr Lord says. Perhaps. Or perhaps investors decide, after being burned once, that unit trusts - however well they perform relatively - are not for them. That could be why the market-penetration rate is less than 4 per cent. Mr Lord argues the investment trend is bound to be upwards as understanding improves and the less-than-stellar performance of other investments prove there is no sure thing. The big audience for unit trusts will be the 35-somethings, who are approaching peak earnings power and are better educated than their parents, especially about investment. 'Among that group, over the past nine months, you have the realisation that it is not terribly smart to be be geared up to the eyeballs in property, not only by buying your flat but also by having most of your investment in the Hong Kong stock market, which is a proxy on the property market,' he says. Obviously, what is needed is sound, unbiased advice. And where is that to come from? Even Mr Lord admits that a fund manager who has a mandate to invest in Hong Kong stocks is hardly going to push potential purchasers out door - although, increasingly, fund-management groups might advise clients that their global funds might be a less-risky option. Financial intermediaries should be providing the basic commonsense about portfolio building. But, in the past, too many were more interested in their own commission than the needs of the client. Such conflicts of interest still exist in some sections, Mr Lord alleges, but he believes a growing professionalism - not to mention the firm hand of the Securities & Futures Commission - has meant a fairer deal for investors. The retail banks also are offering better service, although he wonders how strong the temptation sometimes remains to direct money towards in-house funds. Maybe the strongest educational instrument will be the Mandatory Provident Fund, Mr Lord suggests. Employees in pooled investment schemes - which, under the MPF, will be just about everybody in full-time employment - are likely to become much more comfortable with the concept of unit trusts. It would ruin his holiday if he thought that many will come to regard their company pension plan as the conservative portion of their portfolio and so go back to chasing rumour-driven stocks and overly fashionable emerging markets.