AIA: semi-portability switching to peak in 2013; 60% of clients in target-date funds

AIA Pension and Trustee senior vice-president Alice Tse told a seminar the industry expects the Employee Choice Arrangement (“semi-portability”) next year at the earliest; most employees will wait and watch colleagues, friends and family before switching, with the provider-switching peak likely no earlier than 2013.

How should employees prepare?

Learn how each fund type invests and behaves. Tse urged the industry to deepen knowledge of each fund category’s methods and features ahead of more retail-investor sales. She noted money has flowed from guaranteed and conservative funds into target-date funds in recent years — 60% of clients now hold them, suiting Hongkongers short on time for MPF management. Her own portfolio is relatively aggressive, though she avoids Japan equity funds for their chronic losses.

What does Fidelity say about new-fund approvals?

The MPFA is very cautious — emerging-market and commodity funds won’t pass. Fidelity’s Hong Kong institutional business head Luk Kim-ping said at the same event that the MPFA vets new funds very cautiously: emerging-market or commodity-equity funds will definitely be rejected, limiting members’ inflation-beating options — though some Asia equity funds already lean into faster-growing, commodity-linked stocks for inflation protection.

Do your homework before semi-portability — compare fund features at MPF fund comparison.