MPF RESEARCH FOR EMPLOYERS 2016 Means Promising Future
Gain Miles goes the extra mile for you OUR VISION COMPANY BACKGROUND To strive for excellence and be the most trusted and professional advisor leading the Health and Wealth management industry. Over 35 years of experience in pension and employee benefits advising, Gain Miles is one of the most trusted independent specialist serving a variety of Multi-National Corporations and local corporations solving their Pension and Employee Benefits issues. Our service model includes in-depth investment advice; suitability financial analysis; market benchmark references and the most important implementation strategies and services. Our track records and successes have proven our strength in leading the industry especially the MPF and Pension areas. Gain Miles is committed to be responsible to the community; we share our research results and findings; we educate corporates and their people to do proper health and wealth planning; we frequently organize HR Task Group seminars to share and discuss latest MPF issues. We organized the first-of-its-kind MPF Seminar in 1998 to prepare the community for MPF. We have continued our mission and have been continuously organizing hundreds of seminars and workshops with tens of thousands of participants. On top of our advisory services, our effort has extended to online services to facilitate employees of our customers and our individual customers to self-manage their MPF account with ease. GAIN MILES MPF AND PENSION SERVICING ENTITIES Gain Miles Assurance Consultants Limited Member of the Hong Kong Confederation of Insurance Brokers Gain Miles MPF Consultants Limited Member of the Hong Kong Confederation of Insurance Brokers Gain Miles Financial Planning Consultants Limited Member of the Hong Kong Confederation of Insurance Brokers Hong Kong Securities & Future Commission Licensed Corporation OUR SERVICES Pension: Over the years, we advocate the importance of member education and provide advice to employees on the most suitable schemes with professional analysis, in-depth market knowledge and focused advice. Employee Benefits: As employee benefit programs are one of the key tools to retain your best human talent in a competitive environment, our thorough analysis and professional advices cater to the real needs of employees, delivering the most suitable program balancing the considerations of employees and employers. Corporate Risk Management: As specialist in corporate insurance, Gain Miles works closely with clients to analyse the industry environment, assess risks and design comprehensive corporate insurance programs to meet clients specific requirements. Individual Financial Planning: Gain Miles provides a comprehensive range of financial services, customtailored to help our clients achieve their goals. Our professional financial planners leverage their experience, expertise and specialized knowledge in retirement, investment and insurance planning. GENERAL ENQUIRY Office B-D, 31/F Legend Tower, 7 Shing Yip Street, Kwun Tong, Kowloon Tel.: 2893 4402 Email: marketing@gainmiles.com.hk Website: www.gainmiles.com.hk COPYRIGHT GAIN MILES 2016 This report is produced and published by Gain Miles MPF Consultants Limited. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Any request to reproduce material from this study, written or in any other forms must be addressed to Gain Miles Assurance Consultants Limited. While every care has been taken to ensure the accuracy of the information included in the report, no warranty is given in respect thereof.
Preface Welcome to Gain Miles MPF Research for Employers report 2016. This report was published with an objective to provide the most comprehensive information to employers in terms of pension costs, investment performance, key market statistics and consistent tracking of employee needs. Now in its third year, we continue to provide all-inone essentials to employers with this book, providing advice to employers on how to assist employees on MPF management in response to the latest market development and member opinion. We started tracking employee opinion in joint efforts with The Public Opinion Programme of the University of Hong Kong (HKUPOP) since 2012, with our desire to understand members confidence on MPF and their expectation from employers. We are particularly pleasing to uncover the insights behind the unique representation of Gain Miles MPF Confidence Index and demonstrate our commitment to member education. From this book not only you will get a glimpse of the survey trends that have been developing over time, you will also get an idea about members opinion towards Default Investment Strategy (DIS), a new reform proposal by the government to better regulate the default fund arrangement with highly standardized and fee-controlled investment funds. Over the years, Gain Miles prides itself with its leadership that delivers professional analysis, indepth market knowledge and centered-around advice. We trust this book would help employers become more forthright in articulating the values of MPF and serve as an easily accessible and practical guide to build staff productivity and satisfaction. Enjoy reading and welcome any suggestions for the potential topics for the 2017 edition. Chief Executive Gloria Siu
Content PREFACE CHALLENGES ON THE RISE Pension Cost to Employer 3 Employee Behavior, Knowledge, Expectation 5 MPF Member Confidence 7 INVESTMENT PERFORMANCE Fund Performance by Fund Type 9 Average Fund Performance vs CPI 10 Top 10 Performing Funds 11 Top 10 Sub-Categorized Fund Performance by Assets 13 MARKET AT A GLANCE Key MPF Market Statistics 17 Fees & Charges 19 Key MPF News 23 GAIN MILES SOLUTIONS Why Gain Miles 25 Multi-Provider Model 27 Member Education 29
Pension Cost to Employer Employers take a vital role under the MPF system to protect the working population. Under the MPF system since its inception in 2000, employers have the obligation to comply with the MPF regulations by enrolling employees into the MPF scheme they are participating and make regular mandatory contributions to the MPF scheme. With the increase in monthly employment income (Figure 2) and the adjustment of minimum level of relevant income (Min. RI Level) and the maximum level of relevant income (Max. RI Level) (Table 1), pension cost borne by employers has jumped by over 110% in the past decade, according to the 2015 Employee Insurance Benefits (EIB) Research Gain Miles conducted in hand with the College of Professional and Continuing Education (CPCE) of The Hong Kong Polytechnic University (PolyU). Figure 3-6 shows the increasing trend of pension costs of overall market and specific industries from 2005-2015, with the highest leap of over 180% in manufacturing industry. Figure 1: Employee Benefit Cost on MPF/ Pension 2005-2015 Market Overall 3,000 0 Market Overall Pension Benefit Cost (HK$) Pension Benefit Cost on Relevant Income (%) 18,000 10.0% 16,185 14,940 9.0% 15,000 8.0% 12,632 7.0% 12,000 10,180 10,009 6.0% 9,000 7,677 5.0% 4.0% 6,000 3.0% 2.9% 3.8% 4.2% 6.3% 6.0% 5.9% 2005 2007 2009 2011 2013 2015 Pension Benefit Cost on Relevant Income Pension Benefit Cost (HK$) 2.0% 1.0% 0.0% Source: Gain Miles Employee Insurance Benefits Research 2005-2015 Figure 2: Median Monthly Employment Income in Hong Kong Table 1: Minimum and Maximum Relevant Income Levels in Respect of Employees Receiving Monthly Remuneration $ 16,000 $ 14,000 Applicable to contribution periods commencing: Min. RI Level ($ per month) Max. RI Level ($ per month) $ 12,000 $ 10,000 1 Nov 2011-31 May 2012 6,500 20,000 1 June 2012 31 Oct 2013 6,500 25,000 $ 8,000 1 Nov 2013 31 May 2014 7,100 25,000 $ 6,000 2010 2011 2012 2013 2014 2015 1 June 2014 and thereafter 7,100 30,000 Note: 1) Foreign domestic helpers are excluded 2) The median monthly employment income refers to the figure as at the forth quarter of each year, except for 2015 which refers to the first quarter of the year Source: MPFA Source: Census Department (2015) 3
CHALLENGES ON THE RISE Figure 3: Employee Benefit Cost on MPF/ Pension 2005-2015 Business, Financing, Insurance & Real Estate Services Figure 4: Employee Benefit Cost on MPF/ Pension 2005-2015 Manufacturing Business, Financing, Insurance & Real Estate Services Manufacturing Pension Benefit Cost (HK$) 15,000 12,500 10,000 7,500 5,000 2,500 0 6,080 10,944 10,226 10,164 Pension Benefit Cost on Relevant Income (%) 13,898 15,249 1.8% 2.8% 3.6% 5.1% 5.8% 5.0% 2005 2007 2009 2011 2013 2015 Pension Benefit Cost on Relevant Income Pension Benefit Cost (HK$) 10.0% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Pension Benefit Cost (HK$) 18,000 15,000 12,000 9,000 6,000 3,000 0 5,966 12,456 8,722 15,788 2005 2007 2009 2011 2013 2015 Pension Benefit Cost on Relevant Income Pension Benefit Cost (HK$) Pension Benefit Cost on Relevant Income (%) 16,745 16,975 3.9% 6.0% 3.7% 7.6% 5.9% 5.5% 10.0% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Figure 5: Employee Benefit Cost on MPF/ Pension 2005-2015 Transportation, Storage & Logistics Figure 6: Employee Benefit Cost on MPF/ Pension 2005-2015 Wholesale, Retail and Import/ Export Trades Transportation, Storage & Logistics Wholesale, Retail and Import/Export Trades Pension Benefit Cost (HK$) 15,000 12,500 10,000 7,500 6,012 9,427 10,347 11,190 Pension Benefit Cost on Relevant Income (%) 14,070 9.0% 12,992 7.5% 6.0% 4.5% Pension Benefit Cost (HK$) 18,000 15,000 12,000 9,000 7,237 9,432 9,790 14,358 Pension Benefit Cost on Relevant Income (%) 17,860 9.0% 15,150 7.5% 6.0% 4.5% 5,000 3.0% 6,000 3.0% 2,500 0 4.0% 3.9% 4.1% 4.4% 4.6% 4.9% 2005 2007 2009 2011 2013 2015 1.5% 0.0% 3,000 0 4.1% 3.6% 4.5% 6.1% 6.2% 6.2% 2005 2007 2009 2011 2013 2015 1.5% 0.0% Pension Benefit Cost on Relevant Income Pension Benefit Cost (HK$) Pension Benefit Cost on Relevant Income Pension Benefit Cost (HK$) Source: Gain Miles Employee Insurance Benefits Research 2005-2015 4
Employee Behavior, Knowledge, Expectation Behavior Confidence Behavior Knowledge Expectation Back in 2012, Gain Miles carried out the first annual General Public Opinion on MPF in collaboration with The Public Opinion Programme (POP) of the University of Hong Kong (HKU), aiming to examine the development of MPF members in terms of their behavior, knowledge, expectations and confidence, and in the long run to assist members and employers to better manage their MPF. In its 5 th run this year, new questions on weighting determining the relative importance of confidence sub-index including clothing, food, accommodation, transportation, medical care and entertainment; and members opinion towards Default Investment Strategy (DIS), a new proposal by the government to better regulate the default fund arrangement with highly standardized and low-fee funds, were added with results summarized on p.5-8 Question Did you spend at least 30 minutes to review or evaluate your MPF investment in the past 12 months? Not sure/ hard to say 0.1% Yes 24.3% No 75.6% Question 51.4% Why didn t you review or evaluate your MPF investment? (Multiple answers allowed) 39.7% 31.6% 30.7% No expectation on MPF return Too complicated/ hassling No Time Lack of Knowledge Question What is the most important evaluation criteria when you review MPF investment? (10-Most important; 0-Least important) Fund Performance Fees & Charges Fund Choice Reputation of Service Provider Service Level Mean=7.5 Mean=7.2 Mean=7.1 Mean=6.8 Mean=6.3 5
CHALLENGES ON THE RISE Knowledge Question Do you know the Fund Expense Ratio of your current MPF schemes? Question Do you know your MPF account balance? 1% to 2% 6.1% 2% to <60% 7.3% 0% to 1% 2.0% Not sure/ hard to say 84.6% Less than $50,000 24.2% $50,001 to $200,000 27.4% $200,001 to $500,000 16.4% $500,001 to $1,000,000 4.6% More than $ 1,000,000 0.8% Not sure/hard to say 26.6% Question Do you know DIS will be launched to optimize members investment portfolio by year end? Yes 18.1% Not sure/ hard to say 81.9% Expectation Question Do you think employer has the responsibility to better help employee on MPF management? Question What kind of assistance do you expect from employers? Not sure/ hard to say 2.9% No 40.2% Provision of more than one MPF service provider Personal account consolidation Regular update of market information and investor education Evaluation, analysis and choosing of investment portfolio Yes 56.9% Mean=7.0 Mean=5.9 Mean=5.6 Mean=5.1 Source: 2016 General Public Opinion Survey 6
MPF Member Confidence Gain Miles as one of the most trusted MPF consultancy, is committed to establishing scientific data to examine the trends of member confidence with continuous tracking of MPF Confidence Index which was first developed in 2012. One of the key objectives of the aforementioned Public Opinion Survey is to observe MPF members confidence level on MPF as retirement protection. The MPF Confidence Index averaged at 3.7 out of a 10-points scale in 2012, dropped to 3.3 in 2013, 3.1 in 2014 and 3.2 in 2015 which remained the same in 2016 (Figure 7). Gain Miles dedication to find out the factors leading to the low confidence level and the possible ways to restore members confidence over the years, are well received by the community and press with wide media coverage. To outstand the unique presentation and perform cross-dimensional study on MPF Confidence, Gain Miles has successfully filed the trademark of the Index and started looking into respondents confidence on MPF protection on daily necessities after retirement. Medical Care, Food and Accommodation were rated the top 3 most important protection to be covered by MPF after retirement but confidence level of these all went down as compared to 2015. (Figure 9 and Figure 10) Overall Confidence Index Remains LOW 3.2 (0-10 point scale) ZERO Confidence on MPF 22.2% 2.2 (Accommodation) Lowest 3 Confidence 2.4 Sub-index (Travel / Entertainment) 2.5 (Medical Care) 7
CHALLENGES ON THE RISE Figure 7: MPF Confidence Index 2012-2016 Figure 8: MPF Confidence Score 2016 Mean 3.8 3.7 3.6 3.5 3.4 3.3 3.2 3.1 3.0 2.8 2.9 3.7 2012 3.3 2013 3.1 2014 3.2 2015 3.2 2016 10 1.2% 9 0.3% 8 1.6% 7 2.9% 6 6.0% 5 4 7.2% 3 17.0% 2 12.2% 1 4.0% 22.2% 25.1% 0 Not sure/ Hard to say 0.3% 0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% Figure 9: Importance Level of MPF Protection on Daily Necessities Figure 10: MPF Confidence Sub-index 2015-2016 6.0 5.0 4.0 3.0 2.0 5.6 5.3 4.9 4.7 4.0 3.5 4.5 4.0 3.5 3.0 2.5 4.1 3.9 3.9 3.6 3.1 3.0 2.7 2.5 2.6 2.4 2.22.2 1.0 2.0 0.0 Medical Care Food Accommodation Transportation Clothing Travel/ Entertainment 1.5 Transportation Food Clothing Medical Travel/ Accommodation Care Entertainment 2015 2016 Source: 2016 General Public Opinion Survey 8
Fund Performance by Fund Type Average return of all MPF funds for the past 5 years recorded a single-digit growth of 6.0%. All 6 fund types yielded a positive return, with Mixed Assets Funds leading the way with a 7.1% gain, followed by Equity Funds with 6.4%. Bond and Guaranteed Funds had grown by 6.2% and 4.2% respectively, while MPF Conservative Funds and Money Market Funds were among the bottom performers with a marginal gain of 1.1% and 0.3%. (Figure 11) Equity Funds took up the largest MPF total assets of 40.4% among the six fund types, followed by Mixed Assets Funds of 38.0% and Conservative Funds of 10.2%. The remaining assets were made up of 8.3% Guaranteed Funds, 2.7% Bond Funds and 0.4% Money Market Funds respectively. (Table 2) Some reasons behind the MPF 5-Year Performance of different Fund Types are as follows: Performance of Mixed Asset Fund, which in aggregate holds more U.S. and European assets, outweighed those Equity Funds affected by significant home bias investment in local and Asian markets. Underperformance of Hong Kong market was the main detractor of Equity Funds, with 5-year growth return of HK Equity at 3.2%, compared to 43.3% of U.S. Equity and 11.2% of Europe Equity. 5-Year Cumulative Return of Bond Funds was comparable to that of Equity Funds on average at more than 6% growth. Bond price was pushed up to unprecedented bloom status as a result of continued Quantitative Easing Monetary Policy (QE) of all the Central Banks around the world starting from the US Federal Reserve in 2009; European Central Bank in 2010, and the price trend is still continuing. Capital outflow from Hong Kong and Asian countries, investors should be aware of the risks of Asian and Hong Kong stock performance. Guaranteed Funds which holds majority of Bond Assets recorded a 4.2% growth in 5 years, similar to that of Bond Funds at 6.2%; while MPF Conservative Funds with major Cash and Cash Deposit investment recorded at 1.1% only without capital appreciation. Table 2: MPF Constituent Funds Cumulative Returns by Fund Types, Year to Date (YTD), 1-Year, 3-Year & 5-Year Fund Types No. of Funds * % of MPF Total Assets * Cumulative Return as at March 31, 2016 * YTD 1-Year 3-Year 5-Year Equity Fund 156 40.4% -3.0% -11.7% 4.8% 6.4% Mixed Assets Fund 152 38.0% -0.5% -5.7% 4.0% 7.1% Bond Fund 44 2.7% 3.1% 0.9% 0.8% 6.2% MPF Conservative Fund 35 10.2% 0.0% 0.1% 0.7% 1.1% Guaranteed Fund 22 8.3% 0.6% -0.8% 1.0% 4.2% Money Market Fund 9 0.4% 1.1% -0.7% 0.7% 0.3% Average of all funds 418 100% -0.9% -6.4% 3.5% 6.0% *Excludes SHKP MPF Employer Sponsored Scheme Fund without 5 Years Performance Excluded. Figure 11: 5-Year Cumulative Return by Fund Types of MPF Constituent Funds* as at March 31, 2016 Mixed Assets Fund Equity Fund Bond Fund 7.1% 6.4% 6.2% Guaranteed Fund MPF Conservative Fund Money Market Fund 0.3% 1.1% 4.2% Average of all funds 6.0% 0% 1% 2% 3% 4% 5% 6% 7% 8% * Excludes SHKP MPF Employer Sponsored Scheme Source: Morningstar 9
Average MPF Performance VS CPI INVESTMENT PERFORMANCE 5-Year average performance of all MPF funds as at March 31, 2016 was 5.9%. It was quite below the latest Composite Consumer Price Index (CPI) of 21.6% increase over the same period. Home Bias of MPF Funds, with 38% MPF assets invested in Hong Kong Equity as at December 31, 2015 underperformed most of the market (5-Year average performance of Hong Kong Equity (Index Tracking) as at March 31, 2016 was 3.2%) and not able to catch up inflation measured by the Composite CPI. Expenses of daily necessity of Housing, Food and Transportation together accounts for 65% of the Composite CPI and it has been steadily going up by around 3 to 4 % during the period. The upward trend of Composite CPI is obvious but it has slowed down a little bit recently. Average performance of all funds types during the last 5 years did not do well which all underperformed inflation. Conservative investors should really review their risk tolerance and consult professional consultant to re-allocate their asset mix to protect their asset value. Figure 12: MPF Fund Performance Vs CPI March 2011 March 2016 25% 20% 21.6% 15% 10% 5% 5.9% 0% -5% -10% -15% Mar 2011 Mar 2012 Mar 2013 Mar 2014 Mar 2015 Mar 2016 Composite CPI (Base = 2011 Mar) MPF Average Return Source: Census and Statistics Department, Morningstar 10
Top 10 Performing Funds Similar to that of last year, all top 10 performing funds for the 5-year period ending March 31, 2016 were either direct U.S. Equity or U.S. Equity related funds. U.S. was the best performing market during the period, yet no substantial benefits to overall MPF funds since it only accounted for 8% of the total MPF assets. Except the top performing Health Care sectorial fund and the Green Fund which ranked the 10th position in the table below, the others were direct U.S. Equity or North America Equity Funds. Having said that, there was a wide gap of performances between the funds even though they are investing into the same market, when we looked at the cumulative return of the 2 nd top performing fund at 60.2% whereas the one ranked the 2 nd last was 45.5%. Table 3: Top 10 Performing MPF Funds for Rolling 5-Year Period as at March 31, 2016 Name of Fund Cumulative Return % (April 1, 2011 March 31, 2016) Manulife Global Select MPF Scheme Healthcare Fund 66.4 AIA MPF Prime Value Choice (PVC) North American Equity Fund 60.2 Hang Seng Mandatory Provident Fund ValueChoice US Equity Fund 55.9 HSBC Mandatory Provident Fund ValueChoice US Equity Fund 55.9 Principal MPF Scheme Series 800 US Equity Fund Class I 50.7 Manulife Global Select MPF Scheme North American Equity Fund 50.1 Mass Mandatory Provident Fund Scheme US Equity Fund 48.6 Hang Seng Mandatory Provident Fund - SuperTrust Plus North America Equity Fund 45.5 HSBC Mandatory Provident Fund - SuperTrust Plus North America Equity Fund 45.5 AIA MPF Prime Value Choice (PVC) Green Fund 33.7 Source: Morningstar 11
INVESTMENT PERFORMANCE There are 6 main MPF constituent fund types according to the Mandatory Provident Fund Schemes Authority (MPFA). Organized by fund natures and investment mandates, funds can be sub-categorized to 20 in total. The top 10 sub category assets takes up 90% of MPF market share by size. Table 4: MPF Top 10 Sub-category by Asset Size Top 10 Sub-category by Asset Size as at 31 March 2016 Asset in HK$ million Attribution to MPF market No. of funds in category Hong Kong Equity Fund (Index Tracking Funds inclusive) HK$113,818.4M 19.4% 49 Mixed Assets Fund (Equity Content 80-100%) HK$88,598.5M 15.1% 27 Mixed Assets Fund (Equity Content 60-80%) HK$63,045.5M 10.7% 37 MPF Conservative Fund HK$60,056.1M 10.2% 35 Guaranteed Fund HK$48,862.2M 8.3% 22 Greater China Equity Fund HK$43,724.2M 7.4% 22 Mixed Assets Fund (Equity Content 40-60%) HK$34,784.2M 5.9% 31 Asian Equity Fund HK$31,418.5M 5.4% 28 Mixed Assets Fund (Equity Content 20-40%) HK$27,366.5M 4.7% 27 Global Equity Fund HK$16,977.9M 2.9% 26 Remarks: Exclude SHKP MPF Employer Sponsored Scheme; The figures do not reflect the changes of no. of funds due to AIA scheme restructure before 31 March 2016. Source: Various Fund Fact Sheets as at March 31, 2016 12
Top 10 Sub-Categorized Fund Performance by Assets Hong Kong Equity Fund (Index Tracking Funds Inclusive) Best Worst 5-Year Performance Sun Life Rainbow MPF Scheme First State Hong Kong Equity Fund 15.1% AIA MPF - Prime Value Choice Hong Kong Equity Fund -18.2% Class Average -4.4% Class Median -4.2% Total No. of Funds 38 Mixed Assets Fund (Equity Content 80% - 100%) Best 5-Year Performance My Choice Mandatory Provident Fund Scheme Growth Fund 14.3% Figure 13: 5-Year Cumulative Return - Hong Kong Equity Fund (Index Tracking Funds Inclusive) 50% 40% 30% 20% 10% 0% -10% -20% -30% -40% Mar 2011 Mar 2012 Mar 2013 Mar 2014 Mar 2015 Mar 2016 Sun Life Rainbow MPF Scheme First State Hong Kong Equity Fund Class Average: Hong Kong Equtiy Fund (incl. Index Tracking) AIA MPF Prime Value Choice Hong Kong Equity Fund Figure 14: 5-Year Cumulative Return - Mixed Assets Fund (Equity Content 80-100%) 40% 30% 20% Worst AIA MPF - Prime Value Choice RCM Growth Fund 0.2% 10% 0% -10% Class Average 6.3% -20% Class Median 5.3% Total No. of Funds 26 Mixed Assets Fund (Equity Content 60% - 80%) Best Worst 5-Year Performance Sun Life Rainbow MPF Scheme First State Progressive Growth Fund 20.1% Principal MPF - Simple Plan Balanced Fund 0.2% -30% Mar 2011 Mar 2012 Mar 2013 Mar 2014 Mar 2015 Mar 2016 My Choice Mandatory Provident Fund Scheme Growth Fund Class Average: Mixed Assets Fund (Equity Content 80% 100%) AIA MPF Prime Value Choice RCM Growth Fund Figure 15: 5-Year Cumulative Return - Mixed Assets Fund (Equity Content 60-80%) Return 30% 20% 10% 0% -10% -20% Class Average 8.0% Class Median 8.3% Total No. of Funds 36-30% Mar 2011 Mar 2012 Mar 2013 Mar 2014 Mar 2015 Mar 2016 Sun Life Rainbow MPF Scheme First State Progressive Growth Fund Class Average: Mixed Assets Fund (Equity Content 60% 80%) Principal MPF Simple Plan Balanced Fund 13
INVESTMENT PERFORMANCE MPF Conservative Fund (Performance Before Fee) Best 5-Year Performance BCOM Joyful Retirement MPF Scheme Conservative Fund * 5.7% Figure 16: 5-Year Cumulative Return - Conservative Fund (Performance Before Fee) 6% 5% 4% Worst HSBC Mandatory Provident Fund - SuperTrust Plus MPF Conservative Fund 1.5% 3% 2% Class Average 2.6% Class Median 1.5% 1% 0% Mar 2011 Mar 2012 Mar 2013 Mar 2014 Mar 2015 Mar 2016 Total No. of Funds 11 BCOM Joyful Retirement MPF Scheme Conservative Fund * Class Average: Conservative Fund (Performance Before Fee) HSBC Mandatory Provident Fund SuperTrust Plus MPF Conservative Fund MPF Conservative Fund (Performance After Fee) Best 5-Year Performance Invesco Strategic MPF Scheme MPF Conservative Fund - Unit Class A Figure 17: 5-Year Cumulative Return - Conservative Fund (Performance After Fee) 2% 2.1% 2% Worst MASS Mandatory Provident Fund Scheme Conservative Fund 1% 1% -0.1% 0% Class Average 0.3% Class Median 0.1% Total No. of Funds 23-1% Mar 2011 Mar 2012 Mar 2013 Mar 2014 Mar 2015 Mar 2016 Invesco Strategic MPF Scheme MPF Conservative Fund Unit Class A Class Average: Conservative Fund (Performance After Fee) MASS Mandatory Provident Fund Scheme Conservative Fund Guaranteed Fund 5-Year Performance Figure 18: 5-Year Cumulative Return - Guaranteed Fund Best N/A 6% 5% Worst N/A Class Average 4.2% Class Median 4.6% Return 4% 3% 2% 1% 0% Total No. of Funds 22-1% -2% Remarks: In order to avoid mis-interpretation, only class average of Guaranteed Funds was shown due to significant differences of charges & guaranteed features. Mar 2011 Mar 2012 Mar 2013 Mar 2014 Mar 2015 Class Average: Guaranteed Fund Mar 2016 14
Top 10 Sub-categorized Funds Performance by Assets Greater China Equity Fund Best 5-Year Performance My Choice Mandatory Provident Fund Scheme China Equity Fund 4.8% Figure 19: 5-Year Cumulative Return - Greater China Equity Fund 40% 30% 20% 10% Worst HSBC Mandatory Provident Fund - ValueChoice Hang Seng H-Share Index Tracking Fund -26.7% Class Average -9.9% Class Median -9.3% Total No. of Funds 13 Return 0% -10% -20% -30% -40% Mar 2011 Mar 2012 Mar 2013 Mar 2014 Mar 2015 Mar 2016 My Choice Mandatory Provident Fund Scheme China Equity Fund Class Average: Greater China Equity Fund HSBC Mandatory Provident Fund Value Choice Hang Seng H-Share Index Tracking Fund Mixed Assets Fund (Equity Content 40% - 60%) 5-Year Performance Figure 20: 5-Year Cumulative Return - Mixed Assets Fund (Equity Content 40-60%) Best Sun Life Rainbow MPF Scheme First State Balanced Portfolio Fund 15.4 20% 15% 10% Worst Standard Chartered MPF Plan - Advanced Templeton Asian Balanced Fund 1.1% Class Average 6.6% Class Median 6.7% Total No. of Funds 30 Asian Equity Fund 5-Year Performance Return 5% 0% -5% -10% -15% Mar 2011 Mar 2012 Mar 2013 Mar 2014 Mar 2015 Mar 2016 Sun Life Rainbow MPF Scheme First State Balanced Portfolio Fund Class Average: Mixed Assets Fund (Equity Content 40% 60%) Standard Chartered MPF Plan Advanced Templeton Asian Balanced Fund Figure 21: 5-Year Cumulative Return - Asian Equity Fund Best MASS Mandatory Provident Fund Scheme Asian Pacific Equity Fund 8.7% 40% 30% 20% 15 Worst BOC-Prudential Easy-Choice Mandatory Provident Fund Scheme Asia Equity Fund -17.6% Class Average -2.8% Class Median -0.8% Total No. of Funds 25 Return 10% 0% -10% -20% -30% Mar 2011 Mar 2012 Mar 2013 Mar 2014 Mar 2015 Mar 2016 MASS Mandatory Provident Fund Scheme Asian Pacific Equity Fund Class Average: Asian Fund BOC-Prudential Easy-Choice Mandatory Provident Fund Scheme Asia Equity Fund
INVESTMENT PERFORMANCE 5 Year Cumulative Return - Mixed Assets Fund (20-40% equity) Best Worst 5-Year Performance Invesco Strategic MPF Scheme Capital Stable Fund 12.8% Principal MPF - Simple Plan Stable Fund -3.7% Class Average 5.0% Class Median 3.9% Figure 22: 5 Year Cumulative Return - Mixed Assets Fund (20-40% equity) 20% 15% 10% 5% 0% -5% Total No. of Funds 25-10% Mar 2011 Mar 2012 Mar 2013 Mar 2014 Mar 2015 Mar 2016 5 Year Cumulative Return - Global Equity Fund Invesco Strategic MPF Scheme Capital Stable Fund Class Average: Mixed Assets Fund (Equity Content 20% - 40%) Principal MPF - Simple Plan Stable Fund Best Worst 5-Year Performance AIA MPF Prime Value Choice Green Fund 33.7% Haitong MPF Retirement Fund Global Diversification Fund 6.7% Figure 23: 5 Year Cumulative Return - Global Equity Fund 50% 40% 30% 20% 10% 0% -10% Class Average 20.4% -20% Class Median 22.2% Total No. of Funds 24-30% Mar 2011 Mar 2012 Mar 2013 Mar 2014 Mar 2015 AIA MPF Prime Value Choice Green Fund Class Average: Global Equity Fund Haitong MPF Retirement Fund Global Diversification Fund Mar 2016 Source: Morningstar 16
Key MPF Market Statistics MPF Member MPF Account Number of Relevant Employees ('000) 2,552 Number of Personal Accounts # ('000) 5,191 Number of Self Employed Persons (SEPs)* ('000) 205 Number of 3,786 Contribution Accounts^ ('000) Number of Enrolled Members ('000) 2,757 Note * Self-employed persons under the MPF System include both self-employed persons and employers as defined in the Quaterly Report on General Household Survey, Census and Statistics Department. Note # A Contribution Account is primarily used to receive and hold mandatory contributions and voluntary contributions (if any) paid in respect of a scheme member's current employment or current self-employment for investment. The accumulated contributions together with the investment returns are called accrued benefits. ^ A Personal Account is primarily used to receive and hold accrued benefits in respect of a scheme member's former employment or former self-employment which are transferred from a Contribution Account, and also the part of accrued benefits derived from employee mandatory contributions during current employement which are transffered from a Contribution Account by an employee scheme member. MPF Contribution Average Annual Contribution Per Member HK$25,822 MPF Average Asset Per Member HK$214,936 17
MARKET AT A GLANCE Table 5: MPF Statistics Summary Figure 24: *Number and Net Asset Values of Approved Constituent Funds by Fund Type Total Asset (HK$ million) # 592,578 Total Monthly Contribution (HK$ million)^ 5,933 No. of Enrolled Employers ( 000) * 276 No. of Enrolled Members ( 000) 2,757 Average Asset Per Member (HK$) 214,936 Average Annual Contribution Per Member (HK$) 25,822 # The figure includes assets transferred from ORSO schemes. ^ Total Monthly Contribution includes Mandatory Contributions, Voluntary Contributions and Special Voluntary Contributions * The figure includes number of Self Employed Persons (SEPS) Source: MPF Scheme Statistical Digest, MPFA as at Mar 31, 2016 Number of Funds 180 160 140 120 100 80 60 40 20 0 MPF Conservative Fund Money Market Fund and Others Number of Funds Guaranteed Fund Bond Fund Mixed Assets Fund Equity Fund 270,000 240,000 210,000 180,000 150,000 120,000 90,000 60,000 30,000 Net Asset Value (HK$ million) 0 Net Asset Values (HK$ million) Figure 25: Percentage Share of Contribution Received by Contribution Type as of Q1 2016 Figure 26: Asset Allocation of Approved Constituent Funds by Geographical Region and Asset Class as at 31 December 2015 13% 10% 77% Hong Kong Japan Asia* North America Europe Overall 14% 10% 38% 1% 4% 1% 7% 1% 4% 8% 2% 8% 15% 18% 66% 0% 20% 40% 60% 80% 100% Mandatory (MC) Voluntary (VC) Special (SVC) Deposit & Cash Debt Securities Equities Remarks:Special Voluntary Contribution (SVC) refers to voluntary contributions paid directly by a relevant employee to the Trustee and unlike general voluntary contributions, SVC are nonemployment related. * Excludes Japan and Hong Kong but includes Australia, New Zealand and India Source: MPF Scheme Statistical Digest, MPFA as at Mar 31, 2016 18
Fees & Charges MPFA developed the Fund Expenses Ratio (FER) during the year 2007 and that has been adopted formally by the industry to measure the total fees and charges of a MPF fund. It is the ratio of all the expenses incurred and charged to the MPF fund as a % of the fund size. These expenses are being paid out of the fund and it affects the performance. FER is calculated for each financial period of a Constituent Fund and it is provided in the Fund Fact Sheet of a scheme. Special note should be taken that FER stated in the fund fact sheet is only historical numbers and it is not shown with previous year comparative figures. The trend of the weighted average of total FER of all the MPF funds were shown in Figure 25 below. Improvement of FER has been observed which has dropped from 2.1% of 2007 to 1.59% of March 2016. It is reckoned that FER will still be decreasing with the expansion of fund size in the coming period. FER will further go down if the manual process of MPF within the industry can be improved. Figure 27: Average FER of the MPF Constituent Funds, 2007 to March 31, 2016 2.20% 2.10% 2.1% 2.00% 2.01% 1.94% 1.90% 1.84% 1.80% 1.77% 1.75% 1.70% 1.60% 1.70% 1.65% 1.6% 1.59% 1.50% 12/2007 12/2008 12/2009 12/2010 12/2011 12/2012 12/2013 12/2014 12/2015 Mar-16 Source: Mandatory Provident Fund Authority (MPFA) 19
MARKET AT A GLANCE Table 6: Fund Expense Ratio (FER) of MPF Fund Sub-Category as at March 31, 2016 Fund Main Category MPF Conservative Fund Fund Sub-category* MPF Conservative Fund Highest 1.21% Lowest 0.13% Average 0.69% BCOM Joyful Retirement MPF Scheme MPF Conservative Fund Fidelity Retirement Master Trust MPF Conservative Fund Money Market Fund HK Dollar Money Market Highest 1.39% Lowest 1.03% Average 1.23% Principal MPF Scheme Series 800 HK Dollar Savings Fund Principal MPF Scheme Series 600 HK Dollar Savings Fund RMB and HKD Money Market Highest 1.34% Lowest 0.60% Average 1.04% Sun Life Rainbow MPF Scheme RMB and HKD Fund BOC-Prudential Easy-Choice Mandatory Provident Fund Scheme RMB & HKD Money Market Fund Guaranteed Fund Guaranteed Fund Highest 3.75% Lowest 1.44% Average 2.08% Bond Fund Hong Kong Dollar Bond Highest 1.79% Lowest 1.04% Average 1.57% MASS Mandatory Provident Fund Scheme Guaranteed Fund Principal MPF Scheme Series 800 Capital Guaranteed Fund Sun Life Rainbow MPF Scheme First State Fixed Income Fund Principal MPF Scheme Series 800 Hong Kong Bond Fund Asian Bond Highest 1.58% Manulife Global Select (MPF) Scheme Pacific Asia Bond Fund Lowest 0.78% AIA MPF - Prime Value Choice Asian Bond Fund Average 1.24% Global Bond Highest 1.90% BCT (MPF) Industry Choice Global Bond Fund Lowest 0.91% BEA (MPF) Value Scheme Global Bond Fund Average 1.36% Mixed Assets Fund Equity content 80% 100% Fund Highest 2.08% Lowest 1.04% Average 1.80% FWD MPF Master Trust Comprehensive Scheme Growth Portfolio My Choice Mandatory Provident Fund Scheme Growth Fund To Be Continued 20
Fees & Charges Fund Main Category Mixed Assets Fund Fund Sub-category* Equity content 60% 80% Fund Highest Lowest 2.02% Average 1.71% Manulife Global Select (MPF) Scheme Growth Fund 0.98% BEA (MPF) Value Scheme Growth Fund Equity content 40% 60% Fund Highest 2.11% Lowest 0.77% Average 1.70% FWD MPF Master Trust Comprehensive Scheme Stable Growth Portfolio AIA MPF - Prime Value Choice Fidelity Stable Growth Fund Equity content 20% 40% Fund Highest 2.05% Lowest Average 1.66% FWD MPF Master Trust Comprehensive Scheme Stable Portfolio 0.96% BEA (MPF) Value Scheme Stable Fund Equity Fund Hong Kong Equity (Index Tracking) Highest 1.15% Lowest 0.72% Average 0.89% Sun Life Rainbow MPF Scheme FTSE MPF Hong Kong Index Fund BEA (MPF) Industry Scheme Hong Kong Tracker Fund Hong Kong Equity Highest 2.16% Lowest 0.71% Average 1.72% Greater China Equity Highest 2.09% Lowest 0.89% Average 1.84% FWD MPF Master Trust Comprehensive Scheme Hong Kong Equity Portfolio Haitong MPF Retirement Fund Hong Kong SAR Fund AIA MPF - Prime Value Choice Greater China Equity Fund HSBC Mandatory Provident Fund ValueChoice Hang Seng H-Share Index Tracking Fund Asian Equity Highest 2.29% FWD MPF Master Trust Comprehensive Scheme Asian Equity Portfolio Lowest 1.01% BEA (MPF) Value Scheme Asian Equity Fund Average 1.76% 21 United States Equity Highest 1.97% Lowest 0.94% Average 1.68% European Equity Highest 1.98% Lowest 1.04% Average 1.74% AIA MPF - Prime Value Choice North American Equity Fund AIA MPF Prime Value Choice American Fund AIA MPF - Prime Value Choice European Equity Fund HSBC Mandatory Provident Fund ValueChoice European Equity Fund To Be Continued
MARKET AT A GLANCE Fund Main Category Fund Sub-category* Equity Fund Japanese Equity Highest 2.02% Lowest 1.68% Average 1.92% AIA MPF - Prime Value Choice Japan Equity Fund BOC-Prudential Easy-Choice Mandatory Provident Fund Scheme Japan Equity Fund Global Equity Highest 2.19% FWD MPF Master Trust Comprehensive Scheme International Equity Portfolio Lowest 0.94% AIA MPF - Prime Value Choice World Fund Average 1.69% Other Fund Others Fund (Special Feature) Highest Lowest 2.06% Average 1.76% Manulife Global Select (MPF) Scheme Smart Retirement Fund 0.68% AIA MPF - Prime Value Choice Eurasia Fund Overall FER 3.75% 1.59% 0.13% HIGHEST AVERAGE LOWEST * Excludes SHKP MPF Employer Sponsored Scheme Remarks: The average of FER is changed from simple average to weighted average Source: Various Fund Fact Sheets 22
Key MPF News Default Investment Strategy (DIS) 1 st reading on Mandatory Provident Fund (MPF) Schemes (Amendment) Bill 2015 ( The Bill ) to introduce DIS was completed on 25 Nov 2015 The Bill has been passed by the Legislative Council ( LegCo ) on 26 May 2016 after 3 rd reading Management Fee of DIS funds is subject to a fee cap of 0.75% and 0.95% of FER with target implementation by early 2017 Universal Pension Universal pension scheme proposal was released by Professor Nelson Chow Wing-sun in 2014 A six-month consultation on retirement protection was completed in June 2016 in which a total of 1,200 submissions had been received. The commission of Universal pension included two options 1) A universal pension scheme, allowing everyone aged 65 or above to get a HK$3,230 monthly allowance. 2) An asset cap of HK$80,000 for single senior citizens or HK$125,000 for couples. Dr. David WONG Yau-Kar, the Chairman of MPFA, expressed his wish to provide tax concessions on voluntary contributions to MPF schemes. MPF Offsetting Whether to abolish MPF Offsetting was included in the Universal Pension Public Consultation. Debates are still going on among the Employer Group; Chambers of Commerce; the Labor Union and the various Legislative Council Members. Unemployment insurance can be a solution according to Mandatory Provident Fund Schemes Authority chairman Dr. David Wong Yau-kar. 23
MARKET AT A GLANCE Mergers & Acquisitions Schroders and Sun Life announced on 3 May 2016 they have entered into a strategic relationship. The sponsorship of the Scheme will be transferred to Sun Life and the name of the Scheme will be changed to Sun Life MPF Master Trust. Schroders will continue as the investment manager of the Scheme. Following the completion of Principal s acquisition of AXA s MPF and Occupational Retirement Schemes Ordinance ( ORSO ) businesses in Hong Kong, Principal has taken over the investment managers of six funds in total in the Principal MPF - Smart Plan and Principal MPF - Simple Plan that were acquired from AXA. MPF Benefits Withdrawal Starting from 1 February 2016, members can either choose to withdraw their MPF Benefits by instalments or in a lump sum upon retirement when reaching the age of 65, or upon early retirement at the age of 60. 24
Why Gain Miles Leading MPF Consultant Gain Miles is one of the top well-known pension service consultancies rooted in HK with more than 35 years of solid pension management experiences. We lead the market consistently and continuously by leveraging our pension expertise in breadth and depth. Our Strength and Market Leadership is Powered by People & Knowledge Powered by People & Knowledge Strong team of Corporate MPF Consultants and Individual Servicing Team guided by 6 Core Values- Integrity; Passion; Knowledge; Independence; Pragmatism; Innovation. Continuous learning to acquire industry knowledge and market trends to provide the best possible solutions to clients. Strength Good Governance: First in formulating MPF investment advice formally and officially in strict compliance of SFC Licensing Corporation to adhere to the highest level of professionalism & service standard. Commitment to Public Education: Organized the first-of-its-kind MPF seminar prior to the official launch of MPF to educate the public about MPF. Series of MPF events are held each year to promote active MPF Management among members. Invaluable Research & Survey Findings: First in conducting MPF Public Opinion Survey to understand the behavior, expectation, knowledge and confidence of members; developed longitudinal Employee Insurance Benefits Research since 2003. Member Education: First to establish a dedicated MPF servicing team to provide customized briefing and MPF service support to members, helping to make the best informed decision. Significant Market Player MPF Assets & Contribution: Over HK$4 Billion Asset and HK$500 Million Contribution Under Advisory Pension and MPF Schemes: Managing over 600 corporate schemes Pension and MPF Members: Serving over 35,000 members Member Education: Organized over 300 briefings and help desk service sessions 25
GAIN MILES SOLUTIONS Research-based Service Model Gain Miles believes our first responsibility is to provide the highest quality solutions to our customers, which must be independent, impartial, pragmatic and innovative. The bases of these solutions are supported by consistent and scientific research and survey that we pride ourselves on bringing market benchmark to employers and contributing to the community as a whole. All the research and survey fieldwork operation, data collection and analysis are conducted independently by reputable academic institutions complying the stringent academic assessment requirements. Figure 28: Gain Miles Research and Survey MPF RESEARCH FOR EMPLOYERS 2014-2016 MPF CONFIDENCE INDEX SURVEY 2012-2016 494 435 EMPLOYEE INSURANCE BENEFITS (EIB) RESEARCH 2005-2015 Participating Comapny 103 2003 409 275 224 171 2011 2009 35,578 2007 20,122 2005 20,483 30,457 2013 40,658 2015 52,117 Participating Employees 24,839 26
Multi-Provider Model In 2015, MPFA has launched the first Good MPF Employer Award to recognize employers who place high values on employees retirement needs. The Award aims to encourage employers to further enhance the retirement protection of their employees other than cultivating their compliance with the relevant requirements under MPF legislation. Awardees must have fulfilled at least one of the following criteria during the year: Offered more than one MPF scheme for employees to choose from; or Offered MPF voluntary contributions for their employees; or Offered other forms of retirement benefits for their employees under the MPF System (e.g. offered an ORSO top-up scheme for employees). According to MPFA, 15% Offered more than one MPF scheme for employees to choose from. 655 "Good MPF Employer" Awardees of 2014-2015 27
GAIN MILES SOLUTIONS Multi-Provider Model which literally means offering more than one MPF schemes to employees to meet their personal investment needs: Why should employers consider offering more than one MPF scheme to employees? Fund choices of single MPF scheme is limited Performance and fees of funds may not be competitive enough Difficult to fit personal needs of all employee profile What are the key benefits of providing multiple MPF schemes? Most Suitable Top Fund Choices Mitigation of Concentration Risk No Extra Costs Incurred How can Gain Miles help and support on multiple MPF schemes implementation? Take care of employers administration hassles Offer customized member education Monitor scheme performances and make recommendations Source: MPFA, Gain Miles 28
Member Education Member education is believed to be one of the most critical success factors of MPF development. Members have to be aware of their risk tolerance and investment expectations in order to manage their MPF investment well (Figure 29: Sample of risk evaluation result) (Figure 30: Service Flow of Member Investment Advice). Gain Miles has set up a personalized MPF servicing team to help on MPF investment and risk management education with our commitment to equip members with adequate MPF investment knowledge. Customized member briefing, personalized helpdesk services and fund advisory in compliant with the SFC requirement are provided to support the Multi-Provider Model. Figure 29: Sample of Risk Evaluation Result Your Score Total Score Risk Acceptance Level Risk Profile? 10-16 Low Risk Preservation 17-25 Low to Medium Risk Conservative 26-34 Medium Risk Balanced 35-43 Medium to High Risk Growth 44-50 High Risk Aggressive Figure 30: Service Flow of Member Investment Advice Risk Profiling Questionaire (RPQ) Performance & fee analysis RPQ Score Fund Recommendation 29
GAIN MILES SOLUTIONS Figure 31: Usefulness of Member Briefing to Enhance Understanding on MPF Fees 50 40 30 20 36.4% 40.9% MPF Fees 20.5% 77.3% of members revealed that they found the member briefing organized by Gain Miles is useful to enhance 10 0 2.3% 0.0% Very Useful Useful Fair Not Useful Completely Not Useful their understanding on MPF Fees (Figure 31: Usefulness to Enhance Understanding on MPF Fees) Figure 32: Usefulness of Member Briefing to Enhance Understanding on Fund Choices Fund Choices 50 40 30 20 10 0 40.9% 50% 20.5% 2.3% 0.0% Very Useful Useful Fair Not Useful Completely Not Useful 90.9% on fund choices (Figure 32: Usefulness to Enhance Understanding on Fund Choices) Figure 33: Usefulness of Member Briefing to Enhance Understanding on Fund Performance & Return Fund Performance & Return 60 50 40 30 20 10 0 29.5% 56.8% 11.4% 2.3% 0.0% Very Useful Useful Fair Not Useful Completely Not Useful 86.3% on Fund Performance & Return. (Figure 33: Usefulness to Enhance Understanding on Fund Performance & Return) Source: Gain Miles 30
Appendix PENSION COST TO EMPLOYER Figure 1: Employee Benefit Cost on MPF/Pension 2005-2015 Market Overall Source: Gain Miles Employee Insurance Benefits Research 2005-2015 P. 3 Figure 2: Median Monthly Employment Income in Hong Kong Source: Census Department (2015) P. 3 Table 1: Minimum and Maximum Relevant Income Levels in Respect of Employees Receiving Monthly Remuneration Source: MPFA P. 3 Figure 3: Employee Benefit Cost on MPF/Pension 2005-2015 Business, Financing, Insurance & Retail Estate Services Figure 4: Employee Benefit Cost on MPF/Pension 2005-2015 Manufacturing Figure 5: Employee Benefit Cost on MPF/Pension 2005-2015 Transportation, Storage & Logistics Figure 6: Employee Benefit Cost on MPF/Pension 2005-2015 Wholesale, Retail and Import/Export Trades Source: Gain Miles Employee Insurance Benefits Research 2005-2015 P.4 EMPLOYEE BEHAVIOR, KNOWLEDGE, EXPECTATION Source: 2016 General Public Opinion Survey P. 5-6 MPF MEMBER CONFIDENCE Figure 7 MPF Confidence Index 2012-2016 Figure 8 MPF Confidence Score 2016 Figure 9 Importance Level of MPF Protection on Daily Necessities Figure 10 MPF Confidence Sub-Index 2015-2016 Source: 2016 General Public Opinion Survey P. 7-8 FUND PERFORMANCE BY FUND TYPE Table 2: MPF Constituent Funds Cumulative Returns by Fund Types, Year to Date (YTD), 1-Year, 3-Year & 5-Year Figure 11: 5 Year Cumulative Return by Fund Types of MPF Constituent Funds* as at March 31, 2016 Source: Morningstar P.9 AVERAGE MPF PERFORMANCE VS CPI Figure 12: MPF Fund Performance vs CPI March 2011 March 2016 Source: Morningstar, Census and Statistics Department P.10 TOP 10 PERFORMING FUNDS Table 3: Top 10 Performing MPF Funds for Rolling 5-year period as at March 31, 2016 Source: Morningstar Table 4: Top 10 Sub-category by Asset Size Source: Various Fund Fact Sheet as at March 31, 2016 P.11-12 31
APPENDIX TOP 10 SUB-CATEGORIZED FUND PERFORMANCE BY ASSETS Figure 13: 5-Year Cumulative Return Hong Kong Equity Fund (Index Tracking Funds Inclusive) Figure 14: 5-Year Cumulative Return Mixed Assets Fund (Equity Content 80% 100%) Figure 15: 5-Year Cumulative Return Mixed Assets Fund (Equity Content 60% 80%) Figure 16: 5-Year Cumulative Return MPF Conservative Fund (Performance Before Fee) Figure 17: 5-Year Cumulative Return MPF Conservative Fund (Performance After Fee) Figure 18: 5-Year Cumulative Return Guaranteed Fund Figure 19: 5-Year Cumulative Return Greater China Equity Fund Figure 20: 5-Year Cumulative Return Mixed Assets Fund (Equity Content 40% 60%) Figure 21: 5-Year Cumulative Return Asian Equity Fund Figure 22: 5-Year Cumulative Return Mixed Assets Fund (Equity Content 20% 40%) Figure 23: Global Equity Fund Source: Morningstar KEY MPF MARKET STATISTICS Table 5: MPF Statistics Summary Figure 24: Number and Net Asset Values of Approved Constituent Funds by Fund Type Figure 25: Percentage Share of Contribution Received by Contribution Type as of Q1 2016 Figure 26: Asset Allocation of Approved Constituent Funds by Geographical Region and Asset Class as at 31 December 2015 Source: MPF Scheme Statistical Digest, MPFA as at March 31, 2016 P.13-16 P.17-18 FEES & CHARGES Figure 27: Average FER of the MPF Constituent Funds, 2007 to March 31, 2016 Source: MPFA Table 6: Fund Expense Ratio (FER) of MPF Fund Sub-Category as at March 31, 2016 Source: Various Fund Fact Sheets P. 19-22 KEY MPF NEWS Default Investment Strategy (DIS) Source: MPFA, The Legislative Council Universal Pension Source: AASTOCKS MPF Offsetting Source: The Standard, NOWTV, SCMP Mergers & Acquisitions Source: Principal website, etnet, Sun Life Press Release, ETnet MPF Benefits Withdrawal By Instalments Source: MPFA WHY GAIN MILES Figure 28: Gain Miles Research and Survey MEMBER EDUCATION Figure 29: Sample of risk evaluation result Figure 30: Service Flow of Member Investment Advice Figure 31: Usefulness of Member Briefing to Enhance Understanding on MPF Fees Figure 32: Usefulness of Member Briefing to Enhance Understanding on Fund Choices Figure 33: Usefulness of Member Briefing to Enhance Understanding on Fund Performance & Return Source: Gain Miles P.23-24 P.25-26 P.27-28 P.29-30 32