The accrued benefits of your MPF fund depend on your investment choice. As a member in the workforce, how do you go about choosing an MPF fund that is just right for you? The first thing to do is to understand the characteristics of each type of funds. Currently, there are five different types of fund: Equity Fund, Mixed Assets Fund, Bond Fund, Guaranteed Fund, and MPF Conservative Fund. Below is a table showing their investment objectives, risk level and annualised return:

Your investment portfolio can consist of a fund or a number of funds. People in the workforce have to consider their own situation and aim at a reasonable combination of stocks, bonds or other monetary market instruments in their investments. There is no formula applicable to all. Rather, one should consider one’s risk tolerance level. For example, young people might have an investment period of 30 to 40 years before they withdraw the benefits of their MPF at the age of 65. This affords them with a higher risk tolerance level, and so they can consider a portfolio of high risk and high return investments with a large share of stocks.  People in the middle-age group should lower the risk by reducing the portion of equities and holding more bonds or other low-risk assets. In addition, personal financial situation, personality and investment experience all have an influence on one’s risk tolerance level.

It is important to note that the same type of fund might have different risk levels. For example, sector equity fund usually has a higher risk level than other equity funds.  Moreover, geographically diversified investments usually have a lower risk level than those that are concentrated in one region. For example, equity funds focused in Hong Kong is riskier than global equity funds.

Check also the fees of the funds. Different funds charge at a different rate, which has a significant impact on the net return of a fund. In general, passive investment strategies usually come with a higher fee than active investment strategies. For example, index funds have a lower fee precisely because of this reason.

The past performance of a fund also serves as a useful tool in deciding on a fund. The Fund Performance Platform found on the MPFA website is helpful in this regard. It provides information on the long-term, medium-term and short-term performance of various funds, their risk level and their expenses. However, the past performance of a fund alone does not determine its future performance. At best, it is only a reference.