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As at 30 November 2008, there are 38 MPF schemes in the market that provide an aggregate of 340 constituent funds. On average, scheme members can choose between about 8 types of funds within an MPF scheme.
The law requires all MPF schemes to offer at a minimum, a capital preservation fund (CPF) in each scheme. In order to meet the different risk tolerance levels of scheme members, all MPF schemes in the market provide other investment fund choices in addition to a CPF. The range of the funds on offer may go from low risk steady growth options, to higher risk (potentially) higher growth options.
The following types of funds are available in many MPF schemes:
Bond Fund
An MPF fund that invests in bonds or debt instruments issued by governments, public organisations, banks, commercial organizations or supranational agencies like the World Bank. Bonds acquired by the funds must meet the credit rating or listing requirements stipulated in the MPF legislation. A bond fund achieves its returns through income generated by recurrent interest earned from the underlying bonds or any profit earned from trading the bonds in the market. Bond funds are generally considered to be lower risk investment.
Click here for an overview of the different types of MPF funds.
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