Too Busy to Mind Your MPF? Let a ‘Lazy Fund’ Rebalance It for You

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

Hong Kong’s office workers famously clock ten-hour days. Finding time to manage an MPF portfolio — let alone timing each asset shift — is beyond most of them. The market’s answer is the target-date fund, the original “lazy fund”: choose the year closest to your expected retirement, and the manager handles every rebalancing decision for you.

What is a ‘lazy fund’?

A “lazy fund” is a target-date fund offering a menu of target years. Once you pick the year nearest your expected retirement, investment professionals adjust the asset mix as that date approaches — aggressive when it is far off, conservative as it nears — with no action required from you.

Why not just rebalance it yourself?

DIY rebalancing carries two classic traps. The “straight-line” method trims an equal slice of equities every year but can force young investors out of stocks too early, before capital has compounded; the “step-down” method makes big shifts every few years but offers little protection if markets swing violently around an adjustment date. Effective rebalancing demands experience and timing — otherwise, professional help, or a lazy fund, is the safer route.

Do all lazy funds with the same year behave alike?

Same-year lazy funds are not identical. Different trustees set very different equity weightings ahead of retirement, so performance can diverge — compare fees and glide-path styles before choosing, and ask the scheme provider when in doubt. Compare MPF funds to find the one that fits your timeline.