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Activity papers · Last updated October 2026

HKSI LE Paper 12: Asset Management: free practice test

The paper for Type 9 (asset management) representatives. It covers fund structures, the SFC Code on Unit Trusts and Mutual Funds, the Fund Manager Code of Conduct, portfolio management, performance measurement and fund distribution.

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About the Paper 12 exam

The paper for Type 9 (asset management) representatives. It covers fund structures, the SFC Code on Unit Trusts and Mutual Funds, the Fund Manager Code of Conduct, portfolio management, performance measurement and fund distribution.

What's on the exam

Paper 12
Investment Funds and Their Structure
5 key facts
The SFC Code on Unit Trusts and Mutual Funds
5 key facts
The Fund Manager Code of Conduct
5 key facts
Portfolio Management and Asset Allocation
5 key facts
Performance Measurement and Risk
5 key facts
Fund Distribution and Investor Protection
5 key facts

Each branch is a topic in the official outline. Members see every key fact on the full mind map. Read the free study guide →

How to pass the Paper 12 exam

  • 40 questions in 60 minutes is 90 seconds each.
  • Know who does what in a fund: manager, trustee or custodian, administrator, distributor.
  • Performance ratios (Sharpe, Treynor, tracking error) come up often. Learn what each one uses as its risk measure.
  • You need 70%: 28 out of 40.

Save your results and get your Readiness Score

Create a free account after the test: your score by topic, a mistakes bank, the complete study notes for the first topic, flashcards and the HKSI Key Numbers Sheet.

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What's in the premium Paper 12 prep

Premium Paper 12 prep is studied one topic at a time. Each step starts with that topic's key notes and flashcard deck, then its own question sets of 25, so you master one topic before you move to the next. When every topic is strong, the 6 full mock exams show you're ready.

3,000practice questions, every answer explained
6full-length mock exams, 50 questions each, timed
800flashcards with spaced repetition, sorted by topic
60comprehensive key notes across 6 topics

Your step-by-step study path

  1. 1
    Investment Funds and Their Structure10 key notes, 135 flashcards, then 500 practice questions in 20 sets of 25
    Notes free with an account
  2. 2
    The SFC Code on Unit Trusts and Mutual Funds10 key notes, 135 flashcards, then 500 practice questions in 20 sets of 25
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  3. 3
    The Fund Manager Code of Conduct10 key notes, 135 flashcards, then 500 practice questions in 20 sets of 25
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  4. 4
    Portfolio Management and Asset Allocation10 key notes, 135 flashcards, then 500 practice questions in 20 sets of 25
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  5. 5
    Performance Measurement and Risk10 key notes, 130 flashcards, then 500 practice questions in 20 sets of 25
    Premium
  6. 6
    Fund Distribution and Investor Protection10 key notes, 130 flashcards, then 500 practice questions in 20 sets of 25
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  7. Final step: 6 full mock exams50 questions each, timed like test day. Pass them, then book your exam.
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Read the complete Paper 12 study notes for “Investment Funds and Their Structure”

Our first full set of comprehensive notes, about 10 minutes of reading: Fund structures · Who does what · Main fund types, a worked exam example, the traps examiners use and a one-minute recap. Create a free account to read it and see how premium notes work before you decide.

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Study tools included

3,000 practice questions

3,000 exam-style questions per exam, organized topic by topic in sets of 25. Every answer explained, with the rule it comes from.

6 full mock exams

6 full-length timed mock exams per exam, with real question counts and time limits, so test day feels like practice day.

Exam Readiness Score

One 0 to 100 number that tells you when you're ready to book. Reach 80 and you're covered by our Pass Guarantee.

800 flashcards + spaced repetition

800 flashcards per exam, in a deck for each topic, that come back right before you'd forget them. Five minutes a day keeps every number fresh.

60 comprehensive key notes

60 key notes per exam, split across its topics and each explained in full: the concepts, worked exam examples, the traps examiners use and a quick recap. Your first set is free with an account.

Mind maps

See the whole exam on one screen: every topic and the facts under it.

Sample questions with answers

These are the questions in the free test above, with answers. Try the test first. You'll learn more by getting some wrong.

1. In a Hong Kong unit trust, the party that holds the fund's assets and oversees the manager is the:
Answer: Trustee. The trustee (or custodian for a mutual fund corporation) safeguards scheme assets and monitors the manager's compliance with the constitutive documents.
2. An open-ended fund differs from a closed-ended fund because it:
Answer: Issues and redeems units continuously at NAV-based prices. Open-ended funds create and cancel units as investors subscribe and redeem. Closed-ended funds have a fixed capital and trade on an exchange.
3. A fund whose objective is to match the return of the Hang Seng Index is:
Answer: An index (passive) fund. Index funds and most ETFs aim to track a benchmark, usually with lower fees than active funds.
4. Before a fund can be offered to the Hong Kong public, it generally needs:
Answer: SFC authorization under the SFO. Public offers of collective investment schemes require SFC authorization, usually under the Code on Unit Trusts and Mutual Funds.
5. The Product Key Facts Statement (KFS) for an SFC-authorized fund is:
Answer: A short summary of the fund's key features and risks that forms part of the offering document. The KFS is a concise, plain-language document covering the fund's objectives, risks, fees and other key information. It forms part of the offering documents.
6. Under the Fund Manager Code of Conduct, a fund manager must allocate trades among client accounts:
Answer: Fairly and in accordance with a consistent allocation policy. Fair allocation prevents cherry-picking profitable trades for favoured accounts. Allocations should follow a pre-determined, consistently applied policy.
7. A fund manager receives research and services from a broker in return for directing client trades. Under the FMCC, such soft dollar arrangements are allowed only if:
Answer: The goods and services benefit the clients and execution is best available, with disclosure. Soft dollars must be of demonstrable benefit to clients, transactions must be executed on a best-execution basis, and the arrangements must be disclosed.
8. Setting a long-term target mix of equities, bonds and cash for a fund is:
Answer: Strategic asset allocation. Strategic asset allocation sets long-term targets; tactical allocation makes short-term deviations from them.
9. A manager who looks first at the economy and sectors, then picks stocks within favoured sectors, uses:
Answer: A top-down approach. Top-down starts with macroeconomic and sector views; bottom-up starts from individual company analysis.
10. The Sharpe ratio measures:
Answer: Excess return per unit of total risk (standard deviation). Sharpe ratio = (portfolio return − risk-free rate) ÷ standard deviation. The Treynor ratio uses beta instead.
11. Tracking error measures:
Answer: The volatility of the difference between the fund's return and its benchmark's return. Tracking error is the standard deviation of excess returns versus the benchmark. Index funds aim for low tracking error.
12. A fund's return is 12% when the risk-free rate is 2% and its standard deviation is 20%. Its Sharpe ratio is:
Answer: 0.5. Sharpe = (12% − 2%) ÷ 20% = 0.5.
13. A licensed person recommending a fund to a retail client must first:
Answer: Ensure the recommendation is suitable for the client. Under the Code of Conduct, solicitations and recommendations must be reasonably suitable, considering the client's financial situation, experience and objectives.
14. Which fund feature must be clearly explained to investors because it may restrict when they can get their money back?
Answer: Redemption gates and suspension of dealings. Gates, suspensions and notice periods can delay redemptions. They're liquidity risks that must be disclosed in the offering documents.
15. A management fee of 1.5% a year on a HK$400,000 holding costs the investor about:
Answer: HK$6,000. 1.5% × HK$400,000 = HK$6,000 a year, deducted from the fund's assets.

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Certification guide

Which HKSI papers do you need?: To become an SFC licensed representative (or a relevant individual at a bank), you usually pass three HKSI Licensing Examination papers: Paper 1 on regulation, Paper 7 on financial markets, and one paper for your regulated activity. Here's which one.

Paper 12 exam FAQ

How many questions are on the Paper 12 exam?

40 multiple-choice questions, with a time limit of 60 minutes. Format: closed book, computer-based.

What is the passing score for Paper 12?

70%.

How much does the Paper 12 exam cost?

HK$1,620 in Hong Kong (HK$2,070 at overseas Prometric centres). Fees change, so confirm with the HKSI Institute before you enrol.

Which languages is the Paper 12 exam offered in?

English or Traditional Chinese.

Where do I take the Paper 12 exam?

HKSI Institute computer-based test centre in Hong Kong, or Prometric centres outside Hong Kong.

Is this Paper 12 practice test free?

Yes. The 15-question practice test on this page is free, with an explanation for every answer and no signup. A free account also unlocks the complete study notes for the first topic. The full Paper 12 prep is Premium at HK$1,147 a month for this exam.

What's in the premium Paper 12 prep?

3,000 practice questions organized topic by topic (Investment Funds and Their Structure: 500; The SFC Code on Unit Trusts and Mutual Funds: 500; The Fund Manager Code of Conduct: 500; Portfolio Management and Asset Allocation: 500; Performance Measurement and Risk: 500; Fund Distribution and Investor Protection: 500), 6 full-length timed mock exams of 50 questions, 800 flashcards and 60 comprehensive key notes split across all 6 topics, plus a mistakes bank and the Readiness Score.

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Exam details are summarized from the official candidate information available in October 2026. HKSI Institute changes formats and fees, so confirm with Hong Kong Securities and Investment Institute (HKSI Institute) before you book. HKSIMock is not affiliated with the HKSI Institute or the SFC.

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