Cheuk-man is bullish on equities and wants more equity funds; Kin-pong is near retirement and wants to move from equity to bond funds. Both ask: how does switching actually work? Professor Kam says there are two methods — with very different effects.
The two switching methods
| Method | What happens | Suits |
|---|---|---|
| Switch existing accrued benefits | Redeem part of old funds, buy new ones (the actual “horse switch”) | Those wanting to change the whole portfolio’s risk now |
| Change future contribution instructions | Existing benefits untouched; future contributions follow the new mix | Those wanting gradual adjustment without selling at once |
You can do both: e.g. redeem some bond funds for equity funds while keeping future contributions on the old mix — very flexible.
Three reminders before switching
- Judge long-term: MPF is long-term investing; don’t switch on short-term price noise.
- Weigh the risk: equity funds swing hard — consider job and income stability before adding.
- Paperwork is simple: get the form from your trustee, or use their online platform.
Cheuk-man should remember: adjusting on market views is fine, but don’t turn it into market-guessing; Kin-pong should remember: de-risking before retirement is right, but it needn’t be all at once — stage it.
Switching isn’t hard; switching right is. Compare MPF funds’ fees and returns at MPF fund comparison.
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