Will the ECA trigger an MPF switching stampede? Fidelity urges calm, long-term discipline

陸劍平, Fidelity’s head of institutional business, said in November 2011 that whenever markets turned volatile, 30%–40% of MPF holders typically shifted their fund mix — mostly into conservative funds. His reminder: MPF is a long-term investment whose long-run returns can absorb short-term swings; members should not switch rashly.

MPF switching: will the ECA unleash a great migration?

Surveys showed about 30% of MPF members would consider moving their MPF scheme after the Employee Choice Arrangement arrived — but details were still pending, and 陸劍平 saw no sign of a mass exodus yet. “30% considering” is not “30% moving”: intention surveys and actual switching are usually worlds apart.

The classic volatile-market behaviour: 30–40% flee to conservative funds

Every bout of volatility sends 30%–40% of holders reallocating, mostly into conservative funds — textbook retail behaviour: selling equity funds at the lows, buying conservative funds, turning paper losses into real ones while missing the rebound. 2011 was the live lesson, with MPF down roughly 3.5%–5.29% year to date: the more frightened the market, the more long-term discipline mattered.

Time absorbs volatility

陸劍平’s core advice was simple: over long horizons, time absorbs short-term swings; rash switching turns members into short-term punters and magnifies losses. It matched Fidelity’s concurrent push of target-date funds — letting investment decisions follow life stages, not market moods.

What members can do

The ECA gives you the right to switch schemes, not an invitation to churn funds. Before moving, ask three questions: has my time horizon changed? Has my risk tolerance changed? Are the new scheme’s fees and performance genuinely better? Only three yeses justify action. The MPF education hub teaches how to evaluate a switch.