What is Default Investment Strategy (DIS) ?

December 26th, 2018. 03:55 pm

If you do not have the time or do not want to make an investment choice with your MPF contributions, or if you are concerned that the high management fee of the fund you choose or inflation might eat up your earnings, DIS (Default Investment Strategy) might well be the thing for you.  DIS is an investment choice offered by the MPFA, and is a made up of the Core Accumulation Fund (CAF) and the Age 65 Plus Fund (A65F).  Starting on April 1, 2017, members who do not make an investment choice when they set up a new MPF account will have their money invested in DIS.


DIS is invested in various assets in different markets in the world.  One of the characteristics is that the investment risk is lowered in proportion to age.  In a process known as “Automatic De-risking”, the trustee invests the contributions of members who are under age 50 in CAF, which is more ambitious in its approach.  When members reach the age of 50, the trustee will automatically adjust their portfolio every year, reducing their holding in the CAF and increasing their holding in the A65F. When they reach age 64, all their benefits will be held in the A65F.
[Source: The Mandatory Providential Fund Authority]


Low management fee is another characteristic of DIS, which does not exceed 0.75% of the net annual asset of the fund, and the recurrent out-of-pocket expenses must not be over 0.2% of the net asset value of the funds per year, which is lower than the average expenses of similar funds in the market


DIS, sometimes called “the fund for the lazy,” is worth considering for people who are too busy to manage their MPF, but is unwilling to pay a high fee and does not want too poor a return for their investment.