What is fund switching? Four steps to adjusting your MPF mix

Eleven years after MPF’s launch, the system had weathered SARS, the global financial crisis, the US subprime meltdown and the European debt crisis. Chasing decent returns means adjusting the MPF mix across life stages — and reviewing it as markets change. The right tool starts with understanding how switching works, with its pros and cons.

What is fund switching?

Fund switching is one of the most widely offered portfolio-adjustment methods, applying to the “existing balances” portion of an account, and it is highly flexible. Members can designate all or part of the units of one specific fund within their existing balances to be sold, then reallocate the proceeds into a new mix of funds — without touching the other funds in the portfolio.

Fund switching in four steps

1. Know your current mix. Switching requires naming the exact fund to sell, so first get clear on which funds you hold.
2. Designate the fund to sell. Choose the fund and decide whether to sell all or only part of its units.
3. Set the new allocation. Redirect the redeemed money into the new investment fund mix.
4. Leave the rest alone. For example, if existing balances sit entirely in Fund A and Fund B, selling Fund B to buy Funds C and D leaves Fund A’s units and investment untouched.

Different tools for different needs

Besides fund switching, “fund rebalancing” is another way to reshape existing balances — suited to members wanting to rebuild the whole portfolio at once, and covered in the next instalment. To learn the risk profile of each fund type first, see the MPF education hub.