Never Reviewing Your MPF Hurts Returns: BCT Urges Annual Check

Many scheme members have never changed their asset allocation since MPF began in 2000. In December 2011, BCT Group’s managing director and CEO (劉嘉時) told the Economic Digest this was a “very unhealthy investment habit” — the financial crisis had shortened economic cycles, so members should review performance at least once a year, adjust their equity-bond mix by age and market conditions, and never use management fees as the sole yardstick.

Is the management fee the only thing that matters when choosing an MPF fund?

Fees matter, but they should never be the only criterion. Many trustees already allow annual asset reallocation, some with no cap on frequency; members should first set an overall investment goal based on age and risk tolerance, then look at fund content and track record. Chasing only the lowest fee while ignoring performance means switching and dealing costs will keep eating into assets.

Crisis Has Shortened Cycles; Set-and-Forget Is Outdated

Liu noted that most MPF assets sit in equities and bonds, and markets had changed with startling speed. Even professional fund managers must adjust to circumstances — long-horizon investing does not excuse ignoring asset allocation. Not every review must trigger a reallocation, but members should watch how their assets are growing: “MPF is the money in members’ retirement pockets — how can they not care?”

Go Defensive for the Next Two to Three Years

With markets expected to stay volatile for the next two to three years, Liu suggested a more conservative mix, such as raising the share of bond funds, whose returns could beat equity funds. Younger members could invest in Asia, China and Hong Kong for long-term growth potential; those nearing retirement could consider moving to low-risk funds.

Price Wars Bring Consolidation, Not Lasting Wins

On fee disputes, Liu urged members not to over-magnify costs: as MPF assets grew, fees would inevitably fall further, and BCT would keep its charges reasonable “without using low fees as a lure.” After Employee Choice launched, members who followed only fees without checking fund content and track records would see assets nibbled away by handling, dealing and switching costs. Industry experience showed price wars inevitably led to consolidation — a short-term gain for consumers, not the final result.

Members can compare fund charges and track records on mpf.hk’s fund comparison and the MPFA’s fee comparison platform (figures as of 2011).