Back Home

MPFA Articles

MPFA Articles

March 2019

Understanding Guaranteed Fund and Conservative Fund

Mandatory Provident Fund (MPF) schemes member should first learn about the features of the different fund types when managing their MPF portfolio. There are five main types of MPF Funds, namely, Equity Fund, Mixed Asset Fund, Bond Fund, Guaranteed Fund and Conservative Fund. Each of them suits different risk tolerance levels of scheme members, providing them different choices to meet their own investment goals. Mandatory Provident Fund Schemes Authority (MPFA) has noted that some people are particularly not familiar with Guaranteed Fund and Conservative Fund, to which we would like to give a brief introduction on these two fund types.

A Guaranteed Fund provides some form of guarantee, usually on capital invested or a minimum rate of return, to scheme members. It requires scheme members to fulfil a set of conditions to secure the investment guarantee.  Among the most common conditions include reaching the age of 65, or after holding the fund for a minimum period (e.g. three years or above), etc. It is important for scheme members to consider whether they could fulfil the qualifying conditions before investing in a Guaranteed Fund.

A Conservative Fund is essentially a money market fund investing in short-term bank deposits or short-term bonds, targeting a rate of return similar to the Hong Kong Dollar savings rate. All MPF schemes are required to offer an MPF Conservative Fund. A Conservative Fund is a low-risk fund, but on some occasions (in times of high inflation), its return may not be able to beat inflation.

The MPFA has always reminded scheme members not to time the market and switch funds too frequently. Instead, they should manage their investment portfolio according to their own investment objectives, life stages and risk tolerance level.

Back To Top