[Comparison of MPF Schemes from 4 Major Insurers] Which MPF equity fund delivered the highest 10-year return?

There are different types of funds within the Mandatory Provident Fund (MPF) scheme (see Table 1). Among them, equity funds have the highest long-term growth potential and are the main engine for asset appreciation, making them suitable for those with a longer investment horizon and a higher tolerance for investment risk. But which type of equity fund offers the highest returns? 10Life examined the MPF schemes of the four major insurers with the largest total fund size and found that one category of equity fund delivered returns of over 115% over the past 10 years in all four schemes.

Equity funds are often classified according to the markets in which they invest, such as US equity funds (single-country equity funds) and European equity funds (regional equity funds). The more types of funds offered by an MPF scheme, the better it can meet the investment needs of scheme members and help diversify portfolio risk.

The types of equity funds offered vary from one MPF scheme to another. Among the MPF schemes offered by the four major insurers, AIA, BOC Prudential and Manulife each offer at least seven equity fund options, while Sun Life offers only five (see Table 2). It is worth noting that, among the four schemes, only BOC Prudential and Manulife offer Japanese equity funds.

One point to note is that, although they are all equity funds, their risk levels vary. In general, funds that invest heavily in a single market, such as US equity funds, carry higher risk than funds that invest across different markets, such as global equity funds. For the risk level of equity funds, readers may refer to the “risk indicator” in the fund fact sheet.

In addition, readers should also pay attention to the regions in which different equity categories invest, rather than relying solely on the fund name to make a judgement. For example, China equity funds invest in Chinese equities listed in Hong Kong, while Greater China equity funds invest in the stock markets of Mainland China, Hong Kong and Taiwan, among others.

The returns of equity funds are related to the regions in which they invest. Table 2 shows the returns of different categories of equity funds over the past 10 years, covering Hong Kong, Greater China, Asia, global markets and more. US equities have performed well over the past 10 years, which has also benefited the relevant funds. As shown in Table 2, US equity funds outperformed other regional categories. Among them, the 10-year returns of AIA, BOC-Prudential and Manulife-related funds all reached at least 115%, while BOC-Prudential’s North America Index Tracking Fund returned as much as 161.8%.

Different insurance companies perform differently across various equity fund categories. Readers should compare carefully before investing and refer to the fund fact sheets for a detailed understanding of the funds’ features, objectives, risk levels, fees and charges, etc.

The MPF legislation stipulates that all MPF schemes must offer a “Default Investment Strategy” (DIS) option. The Default Investment Strategy has a fee cap of 0.95% and adopts a diversified investment approach, with fund assets allocated across global equity and bond markets. It also automatically reduces investment risk as scheme members approach retirement age. It is suitable for salaried employees who do not have time to manage their MPF or are unfamiliar with investment knowledge, and is therefore commonly known as the “lazy fund”.

This article provides only a rough comparison of the returns of equity funds under different schemes. Past performance is not indicative of future returns. Readers should not rely solely on this document to make any investment decisions. Before making any investment decision or switching funds, you should consider your personal risk tolerance and financial situation, as well as understand the features and investment risks of the relevant funds. If you have any questions about choosing funds, you should seek advice from a financial and/or professional adviser.

Note: Updated to 4 April 2023.

This English version of this article has been generated by machine translation powered by AI. It is provided solely for reference purposes. In the event of any discrepancy or inconsistency between this translation and the original Chinese version, the Chinese version shall prevail.