Best MPF Fund Hong Kong? A Trustee Chief’s Three Tests for Picking Winners

This article is a rewrite of a report from May 2012.

Picking a fund manager is a discipline for trustees too — much like picking a fund is for members. The chief executive of BOC-Prudential Trustee, Hong Kong’s fourth-largest MPF trustee, revealed the firm reviews MPF return performance every two years and decides whether to replace investment managers; whether to bring in the market’s star-performing funds comes down to three factors.

How should I choose an MPF fund?

Choosing an MPF fund comes down to three tests: whether performance is consistently stable, whether the fund is big enough, and whether fees are reasonable. The trustee chief admitted to having “fired” fund managers before — and said that even the champion Hong Kong equity funds run by Haitong and Sun Life would not be added until they cleared all three hurdles.

The three tests, in order

1. Consistency of performance: look for steady long-term results, not a roller-coaster that beats the market in bull runs and crashes in bear markets; retirement savings need overall stability, not one bold bet.
2. Fund size: small funds with modest assets that dabble in unpopular stocks add sudden risk to retirement money; nor do they suit providers with large member bases, where concentration risk builds fast.
3. Reasonable fees: if a fund refuses to cut its charges and they sit out of line with the trustee’s existing plans, it gets passed over.

Is a fee cut the most important factor in an MPF comparison?

Not necessarily. A Sun Life retirement executive said the firm had no plans to chase customers with a price war, preferring to compete on service and investment results. The BOC-Prudential chief added that its funds face a performance review every two years, with further manager changes possible. To run your own numbers, see the MPF education hub for fund explainers and comparison pointers.