MPF Investment Choice: Why Can’t You Buy Gold or A-Shares?

This article is a rewrite of a report from October 2012.

MPF investment comes with a thicket of restrictions: choices are built on conventional bonds, equities and cash — no commodities like gold, no access then to Shanghai or Shenzhen markets, and unlike some unit trusts, no borrowing to gear the portfolio. Sometimes you are glad of the fences; sometimes they irritate, as markets you cannot touch keep rising.

What limits MPF fund types?

Traditional assets only, no alternatives. MPF fund choices could not touch commodities, could not enter the then-closed mainland A-share markets, and could not borrow to enlarge portfolios. The fences exist in law to protect workers’ retirement money.

Are the limits good or bad?

They chafe in bull markets and comfort in bear ones. Two sides: in good times, watching gold or A-shares rally without you stings; in bad times, those same fences spared MPF the leveraged blow-ups and commodity crashes. The 2012 commentator’s closing question still stands: what do you think of MPF’s investment choice?

What can members do?

Allocate well inside the fence. The limits are fixed, but the allocation is yours: the equity-bond-mixed split is what decides returns. Rather than resenting the missing gold, check whether your equity-bond mix suits your age.

What is the lesson from 2012?

The fence is not the enemy — it is the safety net. The 2012 debate still holds: MPF’s investment restrictions stopped millions of workers losing everything. Fewer choices does not mean worse returns — allocating well within them is the real skill.