HKSI Paper 6 Asset management regulations question: Fund Manager Code of Conduct

HKSI Paper 6Asset management regulations

Harbour Crest Asset Management Ltd manages a Hong Kong fund and delegates the management of its Japanese equity portfolio to a Tokyo manager. The delegate breaches the fund's sector limits for two months. Which statement reflects the Fund Manager Code of Conduct?

A Harbour Crest keeps its obligations to the fund and should monitor the delegate's competence on an ongoing basis
B Harbour Crest need act only if the trustee reports the breach, as the trustee monitors all delegates
C Harbour Crest is answerable only if it failed to take due care when it first selected and appointed the Tokyo manager
D Harbour Crest's obligations for that portfolio passed to the Tokyo manager when the delegation was signed

Show the answer and explanation

Answer: A. Harbour Crest keeps its obligations to the fund and should monitor the delegate's competence on an ongoing basis

Paragraph 1.10 of the FMCC requires due skill, care and diligence in selecting and appointing third-party delegates and ongoing monitoring of their competence, to ensure the principles of the Code are followed. The investment management role may be sub-contracted, but the Fund Manager's responsibilities and obligations to the funds it manages may not be delegated. So Harbour Crest's obligations did not pass to the delegate, care at the selection stage alone is not enough, and it cannot leave monitoring of its own delegate to the trustee. Source: SFC Fund Manager Code of Conduct (October 2024), para 1.10 (as at October 2026).

Common mistake

Believing that delegating the investment role delegates the responsibility. The task can move; the obligation to the fund stays.

Practise more Paper 6 Asset management regulations questions

Exam-style questions with worked answers, then full timed mocks. Free to start.

Start practising →

Study note: Asset management regulations HKSI Paper 6 practice questions & mock exams

Related HKSI Paper 6 questions

Lantau Peak Capital Ltd has four staff: two directors, who form its senior management, and two portfolio managers. It cannot reasonably separate compliance from its other functions. How should it meet the compliance requirements of the Fund Manager Code of Conduct?Tsing Yi Fund Management Ltd is too small to justify a separate internal audit function. Under the Fund Manager Code of Conduct, how should the audit of its management, operations and internal controls be covered?On Monday 2 November 2026, the compliance officer of Kowloon Bay Asset Management Ltd gives Ms Lau, a relevant person, written permission to buy shares in a listed company. The firm has no pending or recent fund orders in the stock. She places her order on Wednesday 11 November. What is the position?

Build a daily practice habit — a few exam-style questions a day, with worked answers. Free to start.

Start practising →

Original study material mapped to the public HKSI Paper 6 syllabus. Unofficial, not endorsed by HKSI Institute or the SFC. Verify figures and rules against current guidance before relying on them.