1. MPF Conservative Fund
Objective: Earn a rate of return similar to the Hong Kong Dollar savings rate.
Instruments: Short-term bank deposits and short-term bonds.
Risks: Low - fluctuation interest rates.
Fees: Administrative fees cannot be charged by trustees if the rate of return in a particular month is lower than or equal to MPFA’s Prescribed Savings Rate for that month.
Features:
The law requires that each MPF scheme offers at a minimum an MPF Conservative Fund.
Low-risk but returns may not beat inflation and may even be negative.
Generally described as a Money Market Fund in the Fund Fact Sheet issued by trustees.
Suitable for: Conservative, risk averse scheme members, especially those close to retirement.
2. Money Market Fund or Cash Fund
Objective: Earn a rate of return higher than bank deposits or short-term certificates of deposit.
Instruments: Short-term interest bearing money market instruments e.g. short-term bank deposits, government bills or commercial papers.
Risks: Low - fluctuation in interest rates and exchange rates.
Fees: Generally charged as a percentage of the fund's net asset value.
Features: Relatively stable. This type of fund can be used to manage cash that is not currently invested, while earning income generated through interest.
Suitable for: People who are close to retirement, or low-risk bearers.
3. Guaranteed Fund
Objective: Guarantee on capital invested, or guaranteed rate of return.
Instruments: Bonds, stocks or short-term, interest- bearing, money market instruments.
Risks: Low - the guaranteed rate of return may be modified with prior notice; credit risk of related insurance company (if holding an insurance policy); guarantor risk.
Fees: The guarantor usually charges a guarantee fee or reserve fee, in addition to the basic fees and charges typical of other MPF funds.
Features:
Two major types of guarantee: capital guarantee or return guarantee.
To qualify for the guarantee, all guarantee conditions such as minimum investment period and withdrawal requirements must be met.
Scheme members must read the terms and conditions of individual funds carefully.
Suitable for: Risk averse scheme members, especially those close to retirement who are willing to abide by the guarantee conditions.
4. Bond Fund or Fixed Income Fund
Objective: Earn a stable income from interest and the bond coupon rate. Make profits from bond trading.
Instrument: Bonds.
Risks: Low to medium - fluctuation in interest rates, exchange rates and bond credit ratings.
Fees: Generally charged as a percentage of the fund’s net asset value.
Features: The bonds must meet the minimum credit rating or listing requirements prescribed by MPFA.
Suitable for: Moderately conservative scheme members with a low risk appetite, and those seeking a stable return over the medium-to-long term.
5. Mixed Assets Fund
Objective: Achieve capital appreciation over the long term. Invest in a combination of stocks and bonds.
Instruments: Stocks and bonds.
Risks: Medium to high - stock market volatility, interest rate fluctuation, exchange rate fluctuation, and bond credit ratings.
Fees: Generally charged as a percentage of the fund’s net asset value.
Features:
Different Mixed Assets Funds have different proportions of stocks and bonds.
In general, a greater proportion of stocks is associated with higher risk.
Scheme members may adjust the proportion of stocks to bonds in their portfolios at different life stages.
Suitable for: Any stage of life.
6. Equity Fund
Objective: Achieve capital appreciation and a return higher than inflation over the long term.
Instrument: Stocks.
Risks: High - stock market volatility, exchange rate fluctuation and the overall condition of listed companies.
Fees: Generally charged as a percentage of the fund’s net asset value.
Features:
Usually three types of Equity Funds: single market, regional market or global market.
Invest mainly in stocks listed on stock exchanges approved by MPFA.
Suitable for: Young scheme members with a longer investment horizon and a higher risk tolerance level, and other risk tolerant scheme members.