When a scheme member joins an MPF scheme, the trustee will provide the member with an MPF Scheme Brochure (or referred to as an “offering document”). This document contains details of all the funds available in the scheme. The trustee will allocate fund units to the scheme member’s account according to the member’s investment choices, forming the investment portfolio.
Risk tolerance level
Different types of funds have different risk levels. Therefore, scheme members should assess their risk tolerance level before choosing a fund or funds. Key factors affecting the risk tolerance level of scheme members include investment horizon, investment appetite and other savings and investments for retirement.
Scheme members may choose their investments according to their risk appetite. If their risk tolerance level is relatively high, they can consider a growth portfolio with a higher proportion of equity funds. If their risk tolerance level is relatively low, they can consider a conservative portfolio with a larger proportion of conservative assets.
There is no absolute standard for asset allocation in any portfolio. Different funds have different benefits and risk levels. The key is to choose a portfolio that matches one’s risk tolerance level.
Review portfolio regularly
Depending on the age of the scheme member, the MPF investment horizon can be as long as over 40 years. Scheme members should therefore review their investment portfolios regularly. They can consider gradually reducing their holdings of higher-risk assets (e.g. stocks) while increasing their holdings of lower-risk assets (e.g. bonds) as they get older in order to reduce investment risk.
For more information on choosing funds and reviewing portfolios, please visit the thematic website on MPF investment education.