MPFA has put in place regulations and guidelines to protect scheme members’ interests and give trustees and investment managers guidance on their management of the assets of MPF and ORSO schemes.
Learn more about the Legislation and Regulations
Trustees and investment managers are legally bound by the duties and powers set out in the law regarding the administration and investment of MPF funds. Such requirements include:
- investment of MPF scheme assets must be performed by investment managers that are registered with the Securities and Futures Commission (SFC);
- the primary investment manager of any MPF scheme must:
- be a locally incorporated investment management company;
- have at least $10 million in paid up share capital; and
- have net assets of at least the same amount; and
- investment managers must be registered with the SFC in order to manage authorized unit trusts or pooled retirement funds. They must possess additional expertise if the funds they manage invest in financial derivatives.
Trustees and investment managers are responsible for carrying out investment management functions under their MPF schemes. They should perform such duties within the bounds of the law, the fund’s investment mandate, and the list of permissible investments prescribed in the regulations.
The list of permissible investments, which includes some qualitative and quantitative limits, was developed with reference to the prevailing best practices of the retirement funds industry in order to reduce avoidable risks, such as those relating to liquidity, valuation, counter parties and diversification.
Spread of investments
The total amount invested in securities and permissible investments issued by any one person may not exceed 10% of the total funds of an MPF fund.
Borrowing and lending of securities
No borrowing of securities is allowed. Securities lending and repurchase agreements are permissible, but only to the limited extent as set out in the law.
Borrowing of money
Borrowing of money is permissible only under certain limited conditions.
Securities and futures
MPF funds may invest in:
- fully paid-up shares listed on approved stock exchanges;
- investment grade debt securities; or
- certain forms of convertible debt securities.
The funds may, to a limited extent, invest in listed warrants and may also engage in hedging through certain financial derivatives within the permitted limits.
Bank deposits and currency exposure
MPF funds may be deposited with eligible banks subject to the spread of investments provided in the legislation.
MPF funds must have at least 30% of their assets in Hong Kong dollars.
Details of these general requirements can be found in Schedule 1 to the MPF Schemes (General) Regulation and MPF Guidelines on Investment.
Restricted investments (employer sponsored schemes)
Employer sponsored schemes may not have more than 10% of their assets in shares or other securities of, or issued by, the participating employer or its associates.