MPF Funds vs Ordinary Funds

MPF funds may look like ordinary investment funds, but they face stricter regulation and tighter investment limits. Understanding the difference explains where the MPF’s conservative design comes from.

Who regulates MPF schemes?

The MPFA is the lead regulator; the SFC authorises the fund products. The MPFA oversees the general management of MPF schemes: registering schemes, authorising constituent funds and pooled investment funds, approving and regulating trustees (independent of fund managers, responsible for safekeeping scheme assets), and issuing codes and guidelines for smooth operation.

What does the SFC do?

The SFC authorises MPF schemes (including constituent funds) and pooled investment funds. Offering documents and marketing materials must be vetted by the SFC before distribution to investors. The SFC also licenses companies managing MPF funds: qualified managers must be incorporated in Hong Kong with paid-up capital and net asset value of at least HK$10 million, hold an SFC licence, and be qualified to manage authorised unit trusts or pooled investment funds.

How are intermediaries regulated?

An intermediary firm and its representatives must first be regulated by the SFC, the HKMA or the Insurance Authority before registering as MPF intermediaries. The MPFA’s Code of Conduct for MPF Intermediaries supplements the codes issued by those regulators — intermediaries must comply with both sets simultaneously.

What’s the biggest difference from ordinary funds?

MPF funds must obey additional MPFA investment restrictions, making them more conservative. These include strict limits on derivatives and cash/securities borrowing, a ban on gearing, minimum credit-rating requirements for debt securities, and a requirement that each constituent fund hold at least 30% of its assets (by market value) in Hong Kong dollar investments.

Compare MPF schemes’ fund choices at MPF fund comparison or learn about fund types at the MPF education centre.