After nearly a decade's operation, the average Mandatory Provident Fund member's account might have accumulated a contribution (made up by employer and employee) of more than HK$200,000. Against the backdrop of increased market volatility, scheme members would have had quite a different result with their investment if there had been asset switching to timely investments.
Yet making sound decisions relies largely on having adequate fund information in a timely manner. Currently the Code on Disclosure for MPF Investment Funds requires provision of fund fact sheets by the trustee to fund members at least twice a year.
Although most MPF fund providers prepare fact sheets far more frequently, giving summary figures on performance, asset allocation, top holdings, and manager's comments, the release of these one-page fact sheets normally occurs six weeks or more after the end of the reporting month. This period could be reduced to within four weeks, albeit with an allowance of two to three months for the two statutory issues according to chapter D3.1 of the code.
Moreover, the fact sheet usually lacks the breadth and depth that would enable a thorough review of funds. MPFs should provide members with information that is as adequate and timely as that given by unit trust providers.
Other than the minimum 11-item disclosure, the fact sheet should also include monthly net inflow and redemption amount, performance variance analysis against the benchmarker, asset risk classes, risk factor alerts and gains/losses realised from individual transactions.
This would heighten the transparency of the fund and therefore help members better evaluate the funds they are investing.
As a supervisory body, the MPF Authority is expected to be aware of any plausible improvements and any undesirable arrangements that might have disadvantaged scheme members. In the first place it should ensure members' money is not jeopardised by inferior information.
Author: Edward Chan, tutor,
Lee Shau Kee School of Business and Administration,
Open University of Hong Kong
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