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Which Fund(s) should I Choose?

Image MPF JJ Five Band

Risk Tolerance Level

The risk level of different types of fund varies. You should therefore assess your risk tolerance level before choosing a fund or funds. The key factors which affect your risk tolerance level include:
1
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Investment horizon (the number of years before retirement)
Investment horizon (the number of years before retirement)

If your investment horizon is long, you might consider choosing a more aggressive fund; otherwise, you might consider a more conservative fund.

2
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Investment
appetite
Investment appetite

This relates to your willingness to accept investment risk, and is usually shaped by factors such as your personality, past investment experience and investment objectives.

3
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Other savings and investments for retirement
Other savings and investments for retirement

If you have sufficient savings or investments for your retirement, you might consider taking a more aggressive MPF investment approach targeting higher returns.

How can I assess my risk tolerance level?

Financial experts have designed questionnaires to help investors assess their risk tolerance level. For a sample questionnaire, visit the Hong Kong Investment Funds Association’s website, or consult your trustee.

How should I choose a fund after assessing my risk tolerance level?

If your risk tolerance level is high,…

you may consider a growth portfolio with a higher proportion of Equity Funds.

Image If your risk tolerance level is high

If your risk tolerance level is low,…

you may consider a conservative portfolio with a larger proportion of conservative assets.

Image If your risk tolerance level is low
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There are also simple formulas, such as the “100-minus-age rule”, which are used to assess how much equity content in a portfolio would be appropriate. This formula suggests that if, say, you are 30 years old, 100 minus 30 equals 70, so Equity Funds should make up 70% of your investment portfolio. This, however, should only be used as a rough guideline.

The MPF investment horizon can be as long as 30 to 40 years, during which time you will go through different stages of life. You should review your investment portfolio regularly. You can gradually reduce your holdings of higher-risk assets (such as stocks) while correspondingly increasing your holdings as you get older, in order to reduce investment risk and protect your returns in the long term.

Besides, if you do not give your trustees any investment instructions for your MPF benefits, your MPF benefits will be invested automatically according to the Default Investment Strategy (DIS). You can also choose to invest your MPF benefits either according to the DIS or in the individual funds under the DIS.
Image learn more There is no absolute standard for asset allocation in any portfolio. The key is to choose a portfolio that matches your risk tolerance level.

According to an MPFA study, diversification across regions or asset classes tends to lower investment risk. For instance, relatively speaking, the risk level of Global Equity Funds is lower than that of Regional Equity Funds, and the risk level of Mixed Assets Funds is lower than that of Equity Funds on the whole.

For information about individual MPF funds, please refer to the MPF Scheme Brochure and Fund Fact Sheet provided by the relevant trustee.
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