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Overview of Fund Types

Fund Type

Other Commonly Used Name(s)

Investment Objective

Investment Instruments

Risk Level

Major Risks

Fees & Charges

Features/Points to Note

Potential Suitability

Equity Fund - To achieve capital appreciation and a return higher than inflation over the long term Stocks Relatively high Stock market volatility and performance of individual stocks, and exchange rate fluctuation The fee is generally a percentage of the fund’s net asset value.
  • Equity Funds are frequently described in terms of geographical allocation: single market, regional market or global market.
  • They invest mainly in stocks listed on stock exchanges approved by the MPFA.
Young scheme members with a longer investment horizon and a higher risk tolerance level; other risk tolerant scheme members
Mixed Assets Fund Stable Fund, Balanced Fund, Life-Cycle Fund, Growth Fund To achieve capital appreciation over the long term through investing in a combination of stocks and bonds Stocks and bonds Medium to high Stock market volatility and performance of individual stocks, interest rate fluctuation, exchange rate fluctuation, and bond credit ratings The fee is generally a percentage of the fund’s net asset value.
  • Different Mixed Assets Funds have different proportions of stocks and bonds. In general, a greater proportion in stocks is associated with higher risk.
Scheme members may adjust the proportion of stocks to bonds in their portfolios at different life stages.
Bond Fund Fixed Income Fund To earn a stable income from interest and bond coupon rates, and make profits from bond trading Bonds Low to medium Fluctuations in interest rates and exchange rates, and bond credit ratings The fee is generally a percentage of the fund’s net asset value.
  • The bonds must meet the minimum credit rating or listing requirements stipulated in the MPF legislation.
Moderately conservative scheme members with a low-risk appetite, and those seeking a stable return over the medium-to-long term
Guaranteed Fund - To provide a guarantee on the capital invested, or to achieve a guaranteed rate of return Bonds, stocks or short-term, interest- bearing, money market instruments Relatively low (but it also depends on whether the guarantee conditions can be met when the MPF is withdrawn) The credit risk of the related insurance company (if invest in guaranteed fund that invests solely in a fund in the form of an insurance policy) A guarantee charge is usually charged, apart from management fees.
  • There are two major types of guarantees: capital guarantee or return guarantee.
  • To qualify for the guarantee, all guarantee conditions, such as minimum holding period etc., must be met (scheme members must read the terms and conditions of the individual fund carefully).
Risk averse scheme members, especially those close to retirement who are willing to abide by the guarantee conditions
Money Market Fund – MPF Conservative Fund - To earn a rate of return similar to the Hong Kong Dollar savings rate Hong Kong dollar denominated short-term bank deposits and short-term bonds Relatively low Fluctuation in interest rates No administrative fees can be charged by trustees if the return in a particular month is lower than or equal to the MPFA’s prescribed savings rate for that month.
  • The law requires that all MPF schemes offer an MPF Conservative Fund.
  • MPF Conservative Funds are low-risk funds, but they are not principal-protected and the return may not beat inflation and may even be negative.
Conservative, risk averse scheme members, especially those close to retirement
Money Market Fund – Other than MPF Conservative Fund - To earn a rate of return similar to short-term savings rate or stable income from interest or bond coupon rates Short-term, high quality interest bearing securities (e.g. short-term certificates of deposit, government papers or commercial papers) Relatively low Fluctuation in interest rates and exchange rates The fee is generally a percentage of the fund’s net asset value.
  • Money Market Funds are low-risk funds, but they are not principal-protected and the return may not beat inflation and may even be negative.
Conservative, risk averse scheme members, especially those close to retirement
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