Information Centre

MPF is a very long-term investment and therefore it is inevitable to encounter economic cycles during such a long period of time. Scheme members are advised not to treat MPF with a short-term speculative perspective. Short-term performance of MPF does not represent MPF performance over the whole investment period of scheme members. Switching MPF funds after a significant drop in the market can easily lead to a situation of "buying high, selling low", turning short-term fluctuations into actual investment losses. In fact, over the past 22 years since its inception, the MPF recorded positive returns in most of the years, and there were normally rebounds after those years with negative returns.

The design of the MPF System has three key advantages, namely dollar-cost averaging, diversified investment and default investment strategy (DIS), to assist scheme members for accumulating retirement reserve. 

1. Averaging out the costs of fund units with dollar-cost averaging
With dollar-cost averaging, MPF scheme members need not predict the best timing to enter the market or try to time the market while investing a fixed amount regularly. Long-term and regular investment helps average out the costs of fund units, thus mitigating the impact of short-term market fluctuations on their investment and eventually adding value to their retirement reserves.

2. Diversified investment helps reduce risks
The MPF System provides funds from different markets and asset classes. Scheme members could leverage on this advantage to build up a balanced investment portfolio. Scheme members should review their MPF investment portfolio regularly and take into consideration factors such as their stage of life, risk-tolerance level and personal investment goals when allocating their investment portfolio. They should also bear in mind that investment diversification can effectively reduce investment risk rather than concentrating their investment in a single market or asset type.

3. DIS is worth considering
Scheme members who are unfamiliar with investing or have no time to manage their MPF can consider choosing DIS, which adopts a diversified investment approach by investing in global equities and bond markets, coupled with the feature of “automatic de-risking”, which can effectively reduce risk and is subject to fee cap. It is a ready-made investment strategy that deserves scheme members’ consideration.