The question is, will Hong Kong retail investors be able to wean themselves off the safer plays - bond funds and guaranteed funds - that have proven so popular in recent years?

For those who want to get back into equity markets but still preserve their principal investment, HSBC Bank International recently launched a new equity-linked guaranteed fund.

The HSBC Capital Guaranteed Prosperity Fund has a 100 per cent capital guarantee and a 2.2 per cent guaranteed cash dividend to be paid on each of the fund's four launch anniversary dates.

The equity portion of the fund invests in 12 global blue-chip companies such as Microsoft, Coca-Cola and Exxon, on the basis that these are the players most likely to gain from an upturn in the world economy.

The fund's net asset value depends on the performance of the top three performing stocks in each of four calculation periods over four years and nine months.

At each anniversary the growth of the top three stocks is locked in and the stocks drop out of the fund. The theory is the worst performers of the 12 have the longest time to improve their performance.

It sounds like the best of both worlds - the security of a capital guarantee with an equity play on the back of global recovery.

However, fund investors who do believe that a global economic recovery is under way and want to reflect that in the asset allocation of their investment portfolio would be better off buying one of the hundreds of equity funds for sale in Hong Kong.

These funds not only give you access to rather more than 12 companies, but also provide the flexibility to move from one geographical or thematic fund to another. If you pick funds from a fund house with a decent range, you can move from fund to fund, free as well, and take a profit when you like.

If markets are going up, a guarantee that clips maximum gains at 2.2 per cent a year for four years sounds less like the best of both worlds and more like you can't have your cake and eat it.

If, on the other hand, you are a very risk-averse bank depositor, this fund, in line with other guaranteed products that have been on the market since deposit interest rates collapsed, is not a bad choice.

There are few other places that will offer you a 2.2 per cent return on your savings with the potential of a maturity bonus if the fund does particularly well.

However, guarantees always exact a price.

It should be remembered that a guaranteed fund is not a guaranteed good investment.

It guarantees only a certain level of return.

For example, investors who plumped for US dollar-denominated guaranteed funds in 2000 would be 30 per cent worse off in euro terms now.

Such products also have no protection against inflation.

So, if Hong Kong's economy really is on the upturn, you cannot assume that the current deflationary environment will continue in the future.

Jane Parry is a financial journalist based in Hong Kong