BOC-Prudential MPF: New Index-Tracking Series Brings Active and Passive Together

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

In November 2012, BOCI-Prudential Asset Management announced it had added an “Equity Fund — Index Tracking Series” to its MPF schemes from September, covering the CES Hong Kong 100 Index, European indices and North American indices. Alongside existing equity, mixed-asset, bond and money-market funds, the same scheme now housed both active and passive management styles — members’ choices grew more diverse.

What is good about the index-tracking series?

High transparency, friendlier fees, wider regions. The series is run by the quantitative investment unit using scientific quantitative models; investment policies name the tracked indices plainly; coverage spans Hong Kong, Europe and North America; management fees run 0.9%–0.99% a year depending on fund — a more affordable choice for members.

Why do unlimited free fund switches matter?

Zero-cost rebalancing means you dare follow the market. The scheme offered unlimited free fund switches, freely combining or switching existing and new-contribution allocations; moving funds to preserved accounts needed no prior redemption — time-saving and simple. Account access was equally broad: smartphone app, internet, interactive voice, JETCO ATMs and Bank of China (Hong Kong) e-banking.

What did BOC-Prudential remind members before switching?

No rush — and don’t fixate on any single factor. Retirement and fund investment head Li Yui-leung said members needn’t — and shouldn’t hastily — exercise the transfer right; those currently in guaranteed funds risk breaching guarantee terms by moving rashly. When choosing schemes, don’t fixate on promotions, fees or track records alone; analyse each provider’s full terms against personal needs.

What should you do after switching?

Review regularly, never short-trade; if retirement savings fall short, consider voluntary contributions. Li reminded: after fixing your scheme and mix, review and adjust periodically for personal and market changes; decades of post-retirement living cost plenty — beyond mandatory contributions, consider extra voluntary contributions to build reserves.