The Winner Who Did Nothing: DIS Core Accumulation’s 7.3% Annualised Since 2017, While the 110-Switch Trader Pays a “Behaviour Tax”

In the first half of 2026, members of the same MPF scheme earned anywhere from +32% to -19% — a spread of more than 50 percentage points. Another figure disclosed on BCT’s MPF programme in early September deserves more attention: one member switched funds 110 times in that half-year.

110 times. Roughly 125 trading days in a half-year — a switch nearly every single day. Here is the problem: every MPF fund switch executes on a forward-pricing basis (T+1/T+2 unknown-price mechanism). At the moment you file the instruction, you have no idea at what price you are buying or selling. One hundred and ten blind buys and blind sells in six months is not investing. It is a lottery ticket.

Meanwhile, a quieter cohort did nothing at all. The MPFA Chairman’s blog (August 2026) confirmed that the Core Accumulation Fund under the Default Investment Strategy (DIS) has delivered an annualised return of about 7.3% since its April 2017 launch. Some 3.62 million accounts — roughly 32% of the total — sit in DIS, and the Core Accumulation Fund now accounts for 8% of system assets. The lazy fund is quietly winning.

Reframing the mind: the more you trade, the less you keep

This is not a Hong Kong anomaly. Morningstar’s Mind the Gap 2026 study, published this August and tracking nearly 23,000 US mutual funds and ETFs, found that over the decade ended December 2025, the funds themselves returned 9.9% annualised — but the average dollar invested earned only 8.7%. That 1.2-percentage-point annual “investor return gap” compounded into roughly 12% of total return vanishing into thin air, about US$3.8 trillion in timing-related shortfall. Morningstar’s Jeffrey Ptak put it in one line: “The less trading that allocators do, the more of their funds’ total returns they’re likely to capture.”

The most honest line in the study: the gap was smallest in boring, buy-and-forget allocation funds, and largest in the volatile, specialised funds that people trade in and out of. Ptak’s prescription for retail investors was dollar-cost averaging — the one form of “doing something” that actually works.

Hong Kong’s live evidence is harsher. GUM’s August report (via Caixin, 18 September) showed members chasing performance with a “buy US, sell Hong Kong” rotation: US equity funds drew net inflows of over HK$12 billion year-to-date — five straight months of buying, HK$2.24 billion in August alone — while Hong Kong equity funds (including index trackers) saw net outflows exceeding HK$10 billion. Chasing, by definition, arrives late.

And the object of the chase keeps moving. Lipper data shows Hong Kong equity funds lost 1.1% in August and sit at just +0.2% year-to-date, near the bottom of the league table; GUM’s Q2 numbers had Asia equity funds topping the first half at +27.9% while Hong Kong index-tracking categories sat at the bottom at -10.3% — a 38-percentage-point gap inside the same market. Then MPF Ratings’ 24 September update (estimated on data to 21 September) added the latest twist: US equities led September’s performance, but Asia equities still lead year-to-date. The US funds you chased in August only broke out in September; the Asia exposure you chased in the first half stumbled in Hong Kong in August. The market timer is always half a step behind — and every switch executes at an unknown price, so you do not even know what price you chased at.

The sandbox: HK$5,000 a month, three different 30-year lives

Put the conclusion into a career-starter’s sandbox. Start at 30, contribute HK$5,000 a month for 30 years (HK$1.8 million in total contributions). Illustrative maths:

The 2.3-percentage-point gap between 7.3% and 5% becomes HK$2.31 million after 30 years — a figure larger than everything you contributed (HK$1.8 million). Translate it through the MPFA Chairman’s annuity maths (HK$1.53 million converts to roughly HK$8,000–9,000 a month in lifetime annuity): HK$2.31 million is worth about HK$12,000–13,000 a month, for life.

Now price the behaviour tax. Apply Morningstar’s 1.2-percentage-point annual gap: 7.3% becomes 6.1%, and the 30-year balance falls from HK$6.47 million to HK$5.12 million. Timing and chasing cost HK$1.35 million — roughly four times the current average MPF balance of HK$343,242. A 1.2-point gap sounds like a rounding error; compounded over 30 years, it is a slice of a retirement.

The cruellest line is the conservative fund: HK$2.24 million against HK$1.8 million contributed — three decades of compounding to stand almost still, before even accounting for inflation (Hong Kong’s underlying inflation ran at 1.9% in August 2026).

The levers: turning “doing nothing” into a system

“Doing nothing” only wins with three levers in place:

First, DIS is machinery built for inaction. The fee cap is 0.85% (0.75% management fee plus 0.10% ongoing costs) against a market-average fund expense ratio of 1.36% — that 0.51-point gap is worth about HK$479,000 over 30 years on HK$5,000 a month at a 7% gross return. Globally diversified, with automatic de-risking from age 50. MPF Ratings chairman Francis Chung said it plainly on 24 September: the MPFA-mandated low-fee DIS funds play “a key role in helping MPF members achieve their savings, investment and retirement goals.” GUM’s August report noted the Core Accumulation Fund “continues to be sought after” — smart money is already voting with its feet.

Second, the TVC tax lever is the one active move worth making. A taxpayer on the 17% marginal rate who maxes the HK$60,000 annual TVC contribution saves HK$10,200 in tax — a 20.5% day-one return no fund manager on earth can promise. TVC balances can be transferred in full to another scheme at any time without going through the employer: a low-fee migration route that bypasses the ECA restrictions entirely.

Third, unknown-price protection: not switching is the best unknown-price protection there is. Every fund switch is a T+1/T+2 blind trade, plus out-of-market risk during the transit. DIS members do not even decide when to de-risk — it executes automatically from age 50, with zero timing noise.

This week’s action list

1. Count how many times you switched funds in the past 12 months. Each one was a blind buy and blind sell at an unknown price. Set next year’s target to zero — unless it is a structural migration from a high-fee fund into DIS or a lower-fee scheme.
2. Check your fund expense ratio. Anything above 0.85% in an active mixed-asset fund deserves an honest side-by-side against the DIS Core Accumulation Fund’s 7.3% annualised record and its fee cap.
3. Max out TVC at HK$60,000 before 31 March 2027 (the end of the 2026/27 tax year). At the 17% band that is HK$10,200 saved; a TVC account opens in minutes on the eMPF platform and transfers need no employer involvement.

Markets have never rewarded the busiest. One hundred and ten switches in half a year buys a 1.2-percentage-point annual behaviour tax; doing nothing collects the full 7.3%. Inside the MPF framework — unknown pricing, T+2 settlement, no shorting, no leverage — “doing nothing” is not laziness. It is the only alpha the maths can prove.