Press release

Fidelity Survey Finds Hong Kong Employees Lack Basic MPF Knowledge and Unclear of the Role MPF Plays in their Overall Investment Portfolio

According to a survey covering Hong Kong employees’ knowledge of the basic concepts of MPF and attitudes towards MPF investments announced by Fidelity today, the majority of respondents adopt a “couldn’t care less” attitude and do not spend enough time in managing their MPF assets.

More than half of respondents couldn’t care less


Fidelity calls for proactive management and prudent selection of MPF service provider as MPF members build their nest of eggs


Hong Kong28 April 2010: According to a survey covering Hong Kong employees’ knowledge of the basic concepts of MPF and attitudes towards MPF investments announced by Fidelity today, the majority of respondents adopt a “couldn’t care less” attitude and do not spend enough time in managing their MPF assets. Kerry Ching, Managing Director of Fidelity Hong Kong, said today that some employees have failed to maximise the potential benefits from their MPF by neither reviewing their investments regularly nor proactively managing them. This is due to a number of factors, including misconceptions about MPFs, a lack of basic knowledge about them, and an unclear concept of the role of MPF benefits as part of their overall portfolio.


According to the findings of the “Fidelity 2010 Survey of Members’ Behavior towards MPF”, 55% of respondents said that “they are neither satisfied nor dissatisfied with the performance of their MPF scheme”; 29% of respondents think that MPF is a long-term investment, so they will only manage it later in life; and 28% said that they do not attend to their MPF assets as they have contributed only because it is mandatory.


Kerry Ching said that it takes comprehensive planning and preparation to plan for retirement and employees should pay more attention and look after their MPF investments. She added, “The survey reveals that employees do not care about and ignore the significance of their MPF assets, which contradicts the general attitude towards investments and money. With the impending MPF ‘portability’ in 2011, employees should take this opportunity to establish a habit of managing their MPF investments proactively. In order to provide assistance to employees in this respect and following the footpath of our ‘Common Sense for Uncommon Markets’ investor education series begun in 2009, Fidelity introduces ‘Fidelity Smart MPF Investing’ this year. Through different channels, we aim to strengthen investors’ knowledge in MPF investments, encouraging employees to plan for their retirement in a more proactive way.”


Survey highlight (1): Respondents do not consider MPF as part of their overall investment portfolio

MPF assets of 32% of respondents represent more than 10% of their total assets. However, only 12% of them spend more than 10% of the total time used in managing their overall assets on their MPF investments. This clearly reveals that their time spent in managing MPF falls short of its significance in terms of proportion of their investment portfolio. In addition, slightly over 50% of respondents will not change their MPF investment portfolio at the same time as they change their personal investment portfolio. The rationales are mixed. 80% consider MPF as a long-term investment, so they think it is inappropriate to change the investment strategy. 76% of them believe that investment strategy for MPF should differ from other personal investments. In contrast, less than 50% of respondents will consider changing their MPF investment portfolio at the same time as they change the strategies for personal investment. The reasons quoted include the belief that by simultaneously changing the MPF and personal investment portfolios, MPF members may improve the seemingly lower performance for MPF funds relative to other investments (79%). 52% of the respondents do not know what is an appropriate investment strategy.


“The objective of MPF is to provide basic protection for retirement and as such, the goal should be different from personal investments strategies. Also, comparing performance among different investment products is only valid when the product strategies are comparable. For example, returns from an MPF Balanced Fund investing in both global equities and bonds and that from a single stock are not comparable.” As emphasised by Kerry Ching, employees can allocate their “core” and “satellite” assets based on the 75/25 rule. In other words, the “core” portion, including MPF, should account for the majority of total assets to generate stable and long-term investment returns. Meanwhile, the “satellite” portion, including equity investments, should only constitute for 25% of total assets in which they are investments for the shorter term, aiming to increase overall portfolio returns.


If employees are still uncertain about the appropriate strategy for MPF, they can consider target date funds. Target date funds employ age-based, dynamic asset allocation that will gradually change the portfolio mix from aggressive, higher risk investments that offer maximised growth potential, to more conservative, less risky investments that provide a greater measure of stability, as the retirement date approaches.”


Survey highlight (2): Respondents would only change their MPF portfolios when the stock market fluctuates or when they are going to retire

According to the survey, respondents think that fluctuation of more than 30% in the stock market (32% of respondents) and retirement in the near future (25%) are the two most important reasons for changing their MPF portfolios.


Kerry Ching pointed out, “Employees should review their MPF portfolio’s performance at least once a year. However, this does not necessarily mean that they have to change the portfolio. If their risk tolerance and goals have remained unchanged, they may not need to change their fund selection. Besides, employees should consolidate all preserved accounts into a single MPF account so that they can review and manage the MPF portfolio more easily.”


Survey highlight (3): Respondents would like to see lower MPF fees

Nearly 20% of respondents expect the MPF providers to reduce fees in future. At the same time, 17% hope that MPF contributions will be combined with the contributions to the medical insurance scheme, which is to be introduced by the Government. 16% of respondents hope that the MPF accounts will be linked with other investment accounts for ease of management.


Kerry Ching said, “While fees will certainly impact the ultimately net returns, it is less critical than selecting the ‘appropriate’ MPF scheme with strong and consistent long-term performance.”


Survey highlight (4): Respondents have the right approach in selecting MPF service providers

In general, respondents demonstrate basic knowledge in selecting MPF scheme. Respondents perceive the background of service providers (25%), fund performance (21%) and risk management (15%) as the three most important factors to consider when selecting their MPF service providers. Kerry Ching was pleased to see that employees have the right attitude in selecting MPF service providers.   


When asked about their idea of a satisfactory MPF performance, 26% of respondents think that funds offering a stable and consistent return in one, three, five years and ten years, are satisfactory, whereas 25% of respondents think that funds with a high single-digit annual return rate of approximately 8-9% are considered satisfactory. However, more than 30% of respondents think that the overall return of MPF should be comparable with that of equities or equity funds. Kerry Ching continued, “MPF members shall be aware that MPF funds and equity investments often carry different investment objectives, asset allocations and strategies. Funds also offer the additional benefits of professional management and diversification which are not present with equity investment. Hence, they may not be comparable.”  


Based on the findings of the survey, Fidelity proposes the following four principles for “Fidelity Smart MPF Investing” for employees:


Four Principles for “Fidelity Smart MPF Investing”

(1) A few hundred per month could be future’s big bucks

(2) Remember – MPF and personal investments together

(3) Three keys – background, performance and fees

(4) Sweet talks and offers, think twice before you fall over


About Fidelity International

Fidelity International is an affiliate but separate company to Fidelity Investments and provides investment products and services to individuals and institutional investors outside of the Americas. Fidelity International has been in Asia for 40 years with offices in Japan, Korea, Australia, Hong Kong, Taiwan, Singapore, China. Fidelity International manages US$211.8billion Assets Under Management (as at 31st December 09), has over 6 million customer holdings and manages 937 funds. Fidelity International has one of the largest proprietary research teams in the world, providing insights into around 90% of the world's stock markets (as measured by the Morgan Stanley Capital International World Index, 31 March 2008).  


In Hong Kong, FIL Investment Management (Hong Kong) Limited currently offers more than 80 mutual funds to investors directly and through over 100 distributors, including retail banks and insurance companies. Fidelity in Hong Kong is the largest provider of the ORSO (Occupational Retirement Schemes Ordinance) Member Choice Defined Contribution Scheme[1] and is also one of the top ten MPF (Mandatory Provident Fund) scheme providers in Hong Kong[2] and has been awarded Asia Asset Management’s “Best of the Best Country Awards: Winner award for Hong Kong Best Client Servicing for MPF” in 2004, 2005, 2007 and 2008. In 2010, Fidelity was named “Hong Kong MPF Schemes Provider” by Asian Investors as well as winning “Best Equity Pension Group” and Best Mixed Asset Pension Group” over three years in Lipper Funds Awards.

Media Contacts:

Rowena Kwok
Fidelity International
Tel: 852 2629 2800


[1].Source: Towers Watson Manager Watch, as at 31 December 2009.

[2].Source: Towers Watson MPF Performance Book, as at 31 December 2009.