Investors in Singapore have the highest level of financial literacy worldwide, according to a new study of 16 major countries.

Given a list of 13 questions to test their knowledge, people here scored an average of 9.08 questions correct for a score of about 70 per cent.

Australians came in second with an average score of 8.7 - or 67 per cent - followed by the British at 8.56 points or 66 per cent.

France rounded out the list of 16 nations with a barely-passing score of only 7.1 or 55 per cent, with investors in the Netherlands slightly better at 7.25 points or 56 per cent.

The quiz tested investors on basic issues such as inflation and interest, as well as products like shares, bonds, exchange-traded funds, hedge funds and unit trusts - known in the United States as mutual funds.

The study was conducted by the Centre for Applied Research, an independent think-tank set up by US financial services company State Street Corp. It surveyed 180 investors in Singapore.

Their profiles varied widely, from "mass-market" investors with assets of less than US$250,000 (S$311,700) to high net worth individuals with more than US$1 million of assets under their names.

Investors were also asked about their asset allocation. "Despite the market hitting record highs, retail investors (worldwide) have dramatically increased their allocation to cash," said the Centre for Applied Research.

"Cash allocations (in portfolios) have jumped in the past two years with the global average rising from 31 per cent in 2012 to 40 per cent in 2014."

The Japanese were the keenest, with an average of 57 per cent of their portfolios in cash.

The Dutch and Germans were next, followed by Singaporeans at 46 per cent of assets held in cash.

Investors "aren't able to stomach the volatility they perceive to be in play" and "seek comfort in cash", said the centre.

"The crisis of 2008 is burned into their memories.

"The younger generations in particular are wary of investing in what they perceive to be 'risky' assets. Many of these investors experienced back-to-back crises and they simply don't trust the markets."