Because I have grey hair and write this column, I get asked for advice about investing in unit trusts. Most of the time the questions are more revealing than my answers. Last week, I was approached by a young lady who had decided it was time to start managing her money. She had been sensible and gone to see a professional investment adviser, one with a solid Swiss background. 'I told them I was only looking for an annual return of around 20 or 30 per cent for the next couple of years,' she said. Such are the expectations that have been built up by the Wall Street phenomenon and the apparent great Asian recovery. When some funds have been returning 400 per cent to 500 per cent in 12 months, it must seem almost natural to a newcomer to investment to believe that 20 per cent or 30 per cent is a modest ambition. Yet, there was a time when a fair rate of return was reckoned to be 3 per cent above prevailing interest rates. To look for anything above that was regarded as greed, and the financial history of the world shows how often those who chased even a couple of percentage points above that figure - often plunging into dodgy finance companies or strange commodity funds - paid the ultimate price. A 20 per cent return, compounded over five years, would turn a $1,000 investment into a fraction under $2,500. In the real world that is an astonishing return, but for the past decade or so the real world has been hidden by the great end-of-millennium boom. Even so, of the 66 equity fund sectors measured by Standard & Poor's Micropal on its list of Hong Kong-authorised funds, 23 failed to make returns of 20 per cent over the past 12 months. And these were exceptional months, indeed, given the great pendulum swing in Asia and the continuing technology-led boom of the United States. Our ambitious young lady, like many others, would, of course, prefer to look at the 400-plus sector returns earned this year by Japanese technology funds, or maybe Korea's relatively pedestrian 140 per cent gains. Sadly, investments in such vehicles are usually ruefully examined with hindsight. The reason they do so well is that they invest in stocks which are extremely under-valued. And the reason for this is no one wants them, because their prospects appear so poor. By the time the hidden value is obvious to every one, the game is usually almost over. Another mistake our prospective investor appears to be making is in settling for a two-year view. Usually, unit trusts are part of a long-term investment plan. But if the funds are ultimately destined for another goal, such as a property, then the view must be shorter. The danger in that is that just when the funds are needed, the investments may be going through a cyclical downswing. As a counter, our friend should calculate the amount she is likely to need and then invest in a range of products which together offer the target return with the lowest risk or volatility. Long-term investing is often said to be unpopular in fast-moving Hong Kong, which prefers the excitement of the short-term sprint than the steady marathon. But we are all going to be in for the long run when the Mandatory Provident Fund is introduced next year. The advertisements say that an individual's fund eventually may be worth millions. Can this be true? Well, a look into Micropal's oldest databases certainly shows that there are funds which have achieved some spectacular long-term gains. Going back to 1969 shows that the best performer in the United States was Fidelity's Magellan Fund. This fund, for a long time run by the legendary Peter Lynch, appreciated by 17,961 per cent from December 1969 until today, but was never seen as a super hot fund. Now, if our young lady can identify the one of thousands of funds out there which is going to do as well, by 2030 she is going to be a happy lady. Meanwhile, better to look for steady performers, with low volatility, and let time do the rest.