| 1. |
How can I manage my MPF investments under a volatile market? |
| |
Answer: |
You should bear in mind that MPF investments are long-term investments. You should not be over-concerned about short-term market volatilities if you are still some way from retirement. The only time that the price actually impacts on you is when you take the money out of the system either at retirement or at early withdrawal under special circumstances allowed. Hence, you should think clearly if you really need to switch out of/into an MPF fund just because of the short-term price drop/rise of the MPF fund concerned.
Moreover, MPF investments adopt the dollar cost averaging mechanism, which allows scheme members to spend a fixed amount of contribution to buy an MPF fund on a regular basis regardless of the fund price. Therefore, more units can be purchased when prices are low, and fewer units when prices are high. When the market improves, you can have a better return with more units of MPF fund purchased.
|
| 2. |
Have MPF investments been affected by the financial tsunami? |
| |
Answer: |
All investments, including MPF funds, carry risks. Like other investments, the performance of MPF funds, of which 60% of the total assets are invested in equities as at 30 June 2008, has been affected by the financial tsunami inevitably. Nevertheless, the stringent investment restrictions under the MPF System have alleviated the adverse impact.
|
| 3. |
How does the current regime regulate the underlying investments of MPF funds? |
| |
Answer: |
All MPF funds are required to comply with the stringent investment restrictions under the MPF legislation. The use of high-risk structured products and leveraging is prohibited. The total amount invested in securities and permissible investments issued by a single issuer must not exceed 10% of the total assets of an MPF fund. This aims for diversification to minimize risk.
|
| 4. |
How does the MPFA monitor trustees of MPF schemes to ensure that scheme members’ interests are properly protected? |
| |
Answer: |
The MPFA imposes stringent entry and on-going eligibility requirements in capital adequacy, professional competence, resources sufficiency, internal control and risk management system on trustees, custodians and investment managers.
The MPFA adopts a proactive risk-based approach in monitoring the trustees' on-going compliance with the rules and regulations through reviewing the monthly, quarterly and yearly returns, audited financial statements and reports of the trustees, as well as conducting periodical and special/thematic on-site inspections. The MPFA highly emphasizes that trustees should have proper compliance monitoring systems in place to ensure their on-going compliance with the rules and regulations under the MPF regime.
|
| 5. |
How can I safeguard my own MPF investments? |
| |
Answer: |
Different MPF schemes offer different funds for members to choose. You should understand MPF funds' features and risks by reading the Offering Document and Fund Fact Sheet before investing in it. You should choose the MPF funds that best match with your investment objectives and risk tolerance level.
If the investment climate is unfavorable when you reach the age of 65, you may consider keeping the accrued benefits in the MPF System for continuous investment which best fits the market condition and your personal needs. You may consider withdrawing your accrued benefits later when the prices of MPF funds rebound.
|
