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MPF Education

Investment allocation

When you join an MPF scheme, your trustee (the company in charge of managing your MPF scheme) will provide you with a document, generally called the offering document, but there are other names such as prospectus, principal brochure, and explanatory memorandum. This document details the funds available in the scheme so you can choose which funds to invest in, and to what extent, based on your own investment objectives, risk tolerance level and preferences. Once you make your choice, the trustee will allocate units in each fund to you accordingly; this is your investment allocation.
 
For example, you could choose a mixed assets fund with a certain allocation between bonds and equities.  Alternatively,  you could, for instance, allocate 50% of your contributions to an Equity Fund (higher risk, but with the potential for higher returns), and 50% to a Bond Fund (lower risk with more stable returns). Or you could place 100% of your contributions into just one constituent fund if you believe this is the right choice for you.
 
Some Mixed Assets Funds called Target Dated Funds automatically change the asset allocation for you when the target date (i.e. retirement date) gets nearer. The offering document will describe the asset allocation policy for this type of fund.
 
If you have not specified your investment choice in the enrolment form, your trustee will invest your contributions automatically according to the Default Investment Strategy (“DIS”). You can also choose to invest your MPF benefits either according to the DIS or in the individual funds under the DIS.
 
The DIS is a ready-made investment solution, made up of two Mixed Assets Funds, namely the Core Accumulation Fund (“CAF”) and the Age 65 Plus Fund (“A65F”). It has three key features: (1) automatic reduction of investment risk as members approach retirement age (“automatic de-risking”);(2) fee caps set at 0.95%;and (3) global investment for risk diversification. Please note that if you invest in the CAF and the A65F as standalone investments, rather than as part of the DIS, your investments in these two funds will still benefit from the fee caps and the globally diversified approach, but the automatic de-risking will not apply to these investments. For details, please refer to the DIS thematic website, or contact your trustees.

Last Revision Date: 12/06/2018