External asset management and investment governance
The governance logic of external asset management: authority, custody and conflicts of interest
G70 content review draft | Information as at 5 August 2026
The value of external asset management is not another intermediary. It is the allocation of investment decisions, custody, valuation, reporting and oversight to roles that can be held accountable.
Distinguish the service model and authority first
External asset management is not one uniform service. Discretionary management, investment advice and execution-only arrangements create fundamentally different authority for the manager and responsibility for the client. A family mandate should state objectives, liquidity, leverage, concentration, prohibited assets, related-party transactions and exceptions requiring separate approval. Without clear authority, “integrated service” can become blurred accountability.
Separating management and custody creates checks and balances
Who proposes an investment and which bank or eligible custodian holds the asset, and in what legal form, are different questions. The SFC’s Fund Manager Code of Conduct requires applicable fund managers to safeguard and segregate fund assets, select and continuously monitor custodians with care, and disclose material arrangements and risks. Delegating a function does not automatically remove the manager’s oversight responsibility.
Valuation and reconciliation determine whether reporting is credible
When management or performance fees depend on asset value, valuation is also a conflict issue. For unlisted or hard-to-price assets, families should understand pricing sources, model assumptions, independent review and exception handling. Internal records should be reconciled regularly with banks, custodians, counterparties and executing brokers. A consolidated report that cannot explain data differences merely collects inconsistencies on one page.
Fees and conflicts require specific disclosure
Effective disclosure goes beyond saying that conflicts “may arise”. Families need to know how direct and indirect charges are calculated, whether products or transactions involve related parties, how third-party payments or rebates are handled, how opportunities are allocated among clients, and who selects products, brokers, custodians and valuation sources. Quality depends on prior approval, independent review, objective allocation methods and complete records.
Exit arrangements are part of governance
At the outset, families should confirm who retains transaction and valuation records after termination, when authority is withdrawn, how long an asset transfer may take and whether lock-ups or additional charges apply. A professional external asset-management structure should give the family clearer sight of asset location, decision rights and responsibility, not greater dependence on one contact. This article discusses general governance principles only; G70’s actual fees, trading authority, custody and conflicts arrangements remain subject to formal service documents.
官方資料來源
- Hong Kong SFC | Fund Manager Code of Conduct
- Hong Kong SFC | Fund Manager Code of Conduct FAQs
- Hong Kong SFC | Private funds and discretionary accounts circular (2024)
以上官方資料均於2026年8月5日查閱。法規、政策及市場資料可能其後更新。