Frequent MPF switching does more harm than good: learn to choose before the ECA

Shrewd consumers check the Consumer Council and forums before buying anything — yet nearly 11 years into MPF, most members stayed passive about their retirement investments. Writing in November 2011, a financial adviser 曹偉邦 warned that the Employee Choice Arrangement, due in the second half of 2012, would let members move accrued benefits to any provider once a year. Choice was coming; most people were not ready to choose.

How should members choose MPF funds? Not by performance alone

MPF is a long-term investment; picking funds on performance alone “does more harm than good”. Markets swing and short-term volatility is normal, but herd instinct rules: buy the rally, flee the fall, and end up buying high and selling low. 2011 was the textbook case — MPF deep in the red year to date, the worst moment to rotate into conservative funds being exactly when frightened members did it, locking in losses and missing the eventual rebound.

Comparing MPF: three selection dimensions

The MPFA advised judging schemes on three axes: breadth of fund choice, fee levels, and the provider’s service range. Before that, members must fix their own investment stance: goals, risk tolerance, years to retirement, and external risk factors.

One-stop MPF information platforms had emerged to help, carrying provider updates, fund data and global market news; the better ones offered interactive charts comparing any fund against category peers, with category return benchmarks and medians. 曹偉邦 urged members to use neutral, unbiased platforms to match choices to personal needs.

The ECA menu: 21 providers, nearly 500 funds

Choice cuts both ways: nearly 3 million members would soon pick across 21 providers and almost 500 funds. The ECA would open the market and prod members to manage MPF actively — but only if they first understood their own retirement plan. The MPF education hub teaches comparison from first principles.