Mandatory Provident Fund scheme members should give more weight to the investment value of funds instead of focusing on only charges or returns, says MPF Authority chairwoman Ayesha Macpherson Lau.
In her blog, Lau said there are two kinds of opinions from members in fund selection, namely "low fees matter most" and "I only care about the returns."
Lau said both are incomplete and the investors should strike a balance, adding that schemes with high charges are still worth investing in if they can bring better returns.
And investors should not just look at the past performance of one fund but also refer to their investment goals and the level of risks, said Lau.
She said members should consider their stage of life and risk-tolerance level to select a suitable fund type commensurate with their personal circumstances.
She also highlighted the default investment strategy or DIS which is designed with the principle of diversification of investment risks across regions and asset classes. The "automatic de-risking" feature makes sure that the ratio of equity to bond will be automatically adjusted to match the different stages of life of scheme members.
The fee of DIS funds is capped at 0.95 percent of the net asset value of the fund and the upper limit will be further cut to 0.85 percent after the digital MPF platform begins to operate.
