Don’t day-trade your MPF: unknown prices and the buy-high, sell-low trap

In 2017, MPF funds averaged a return of about 20 per cent, with some aggressive funds even beating the Tracker Fund. Riding a bull market is worth celebrating — but don’t mistake a bull market for skill. Treating your MPF like a trading account and chasing the market usually ends the same way: calling it wrong, buying high and selling low. A double loss.

“Unknown price”: you don’t know your trade price in advance

There is one fundamental difference between trading MPF funds and trading stocks: unknown pricing. A fund’s transaction price is only calculated after the market closes on the trading day, based on the fund’s net asset value divided by units in issue. In other words, when you place the order, you have no idea what price you are buying or selling at — and you cannot specify one.

Want to “buy low, sell high”? Sorry — this game never showed you the cards.

The classic script of calling it wrong

Market-chasers always follow the same script: pile in when the market rises, rush for the exit when it falls. The result is buying at the top and cutting losses at the bottom — the buy-high, sell-low double loss. The golden rule of managing MPF is the exact opposite: never fixate on short-term market swings.

MPF is a long-term investment. Investment decisions should be based on your risk tolerance, personal needs and investment horizon — not on how many points the market gained today.

Not an investor? The Default Investment Strategy is for you

For members less familiar with investing, the Default Investment Strategy (DIS) is a solid option: it automatically de-risks as you age, no market-timing required. The MPFA invited celebrity chef 小儀 (Siu Yee) to make three short videos explaining the DIS’s three features — find them on YouTube at The MPFA Channel, or visit the DIS mini-site (minisite.mpfa.org.hk/DIS).

In a bull market everyone feels like a stock god; in a bear market everyone feels they should run. The MPF answer was never about timing the market — it is about discipline: hold for the long term, allocate to your risk tolerance, and let someone else pay the price of calling it wrong.