Nearing retirement? MPF investing can still be aggressive

Equity funds top the MPF league table for the first seven months of the year, far outpacing the Hang Seng Index, which is still down year-to-date. Don’t assume near-retirees must sit out the equity rally: if the MPF is only a small slice of total assets, treat it as a satellite investment, overweight equity funds and seize short-term opportunities — retirees can invest aggressively too.

What is the “core-satellite” strategy?

Split assets into core and satellite for long and short horizons. Divide assets into core and satellite portions for long- and short-term positioning — attack and defence in one. Rough market convention: aggressive investors run 30% core / 70% satellite, balanced investors 40/60, and conservative investors lift core to 80%.

How aggressive should you be?

It depends whether the MPF is your core or your satellite. If the MPF is merely a satellite of personal assets in old age, near-retirees can afford a bolder stance. This year’s top-10 MPF funds show little change in names, just shuffling order, with gains of 6–10% and a 2–3 percentage-point average monthly rise; Manulife’s healthcare fund and Bank Consortium Trust’s European equity fund hold the top two spots, up nearly 10% year-to-date.

How do retirement funds position?

Even retirement-dated funds hold plenty of equities. If the MPF is a core asset, there’s no need to be overly conservative either — with two decades of post-retirement life, assets must keep growing to beat inflation. Target-date funds that adjust by life stage keep large equity weightings even at the nearest maturity: the AMTD-Invesco Target 2018 Retirement Fund and Manulife MPF 2015 Retirement Fund hold 49.54% and 57% in equities respectively; Fidelity’s “Savings Easy” 2020 and Bank Consortium Trust’s 2020 funds put only about 5% in Hong Kong and international bonds, the rest in equity funds.

Near-retirees rethinking their MPF stance can compare funds at MPF fund comparison.