Best MPF Scheme - HSBC Mandatory Provident Fund – ValueChoice
M: Morningstar H: HSBC
M: Can you highlight any changes that helped facilitate a better investor experience for scheme members in 2018?
H: To facilitate our scheme members making investment decisions, we have been striving to provide adequate and timely information to our customers:
- Product Risk Ratings of all of our Constituent Funds are disclosed in various places including our website, product brochures and our fund fact sheets, and they are updated regularly to reflect latest market conditions, providing our members an indicator of the risk level of each of the Constituent Funds.
- Moreover, our scheme members can complete a Risk Profiling Questionnaire (“RPQ”) to help them determine their own risk appetite and acceptance level, which is a useful reference when they make investment decisions related to their MPF Constituent Funds with different risk ratings.
- Every month, we provide monthly fund performance summary on our website, which contains latest market outlook information. To make this more easily accessible, we even put our market outlook information into a video, which is regularly updated and uploaded to the MPF Academy under our website.
- From time to time, when there are significant market events (e.g. Brexits), we publish our commentaries of such events and how they may influence the investment market.
All the above help to provide investors with more relevant information so they can decide how they manage their MPF investments.
Aside from investment, another important aspect of retirement saving is contributions. As such, HSBC has been issuing the ‘HSBC Retirement Monitor’ since 2015 to help our members to determine their retirement saving target. In 2018, we have revamped the HSBC Retirement Monitor so it now contains 4 sets of typical retirement expenditures of Hong Kong population under different lifestyles, including Basic, Modest, Comfortable and Affluent, which people can use as reference to set their retirement saving target according to their desired retirement lifestyle, and corresponding saving plan.
M: What are some of your more popular MPFs? Why do you think that is?
H: Constituent funds under Hong Kong Equity sector and mixed asset funds are the more popular MPF funds of HSBC, they have the highest portions in our MPF portfolio in terms of fund size under management. (Source: HSBC MPF Fund Fact Sheet as at 4th Quarter 2018). For Hong Kong equities, this may reflect a home-bias preference of MPF investors whilst for mixed asset funds, they are also popular choices as these funds provide diversification benefits for the end investors.
M: Can you comment on how the scheme’s underlying investment options are put together? How do you determine the appropriate product types (e.g. equities, fixed income, target-date) for the scheme and subsequently, the most suitable investment strategy/mandate for each type of product(s)? If the scheme employs external managers, please briefly comment on your manager selection process.
H: HSBC MPF provides different MPF schemes with diversified and comprehensive constituent funds, ranging from actively managed to more passively managed funds and from conservative to aggressive investments to meet clients’ unique retirement needs by choosing their own combination of fund choice.
Our investment managers, HSBC Investment Funds (Hong Kong) Limited and Hang Seng Investment Management Limited are highly committed and conscious to the ESG initiative. For instance, HSBC Investment Funds (Hong Kong) Limited has applied responsible investment practices which incorporate environmental, social and governance (ESG) analysis into the investment decisions to target sustainable longer-term returns for our clients. ESG considerations are integrated into the stock selection process through conducting quantitative and qualitative financial analysis, which result in strengthening our understanding of a company’s underlying risks and opportunities, so that to protect and enhance the asset values we are managing for our clients in the long run.
M: What is the role of fees when you consider the overall appeal of your offering? With an increasingly cost-competitive landscape, how do your fees compare with your peers? Are there any initiatives to reduce fees?
H: Fees is one of the important factors when members consider if a MPF scheme is offering good value for money. According to an independent third-party report on MPF management fees and Fund Expense Ratios (FERs)*, the management fees and FERs of both of two HSBC MPF schemes as at 31 December 2018 are lower than the market media.
We have proactively lowered our management fees six times since the launch of MPF, and our seventh fee reduction is scheduled to take effect on 1 July 2019, with fee cut on two of our equity funds. Currently, 16 out of 25 constituent funds of HSBC MPF (over 60%) are regarded as Low Fee Fund as per the conditions as set out by the Mandatory Provident Fund Schemes Authority, which is one of the highest in the MPF market. And following the fee reduction this July, management fees for all our constituents funds will be at or below the market median in their respective fund categories*.
*Source: ‘Mercer MPF FERs and Fees Report Fund Expenses Ratios as at 31 December 2018’ issued by Mercer (Hong Kong) Limited.
M: What is the key to running a consistently high-performing MPF scheme?
H: HSBC MPF understands scheme members have a wide variety of needs, we provide funds range from actively-managed to more passively managed nature (that is the Index Tracking Funds) under both of our two MPF schemes. Each fund is managed by our professional teams, with members’ interest in our top priority. Our investment strategy combines value, quality, momentum, size and low-risk factors premiums and aims to provide members with consistent competitive returns. Furthermore, we stress on risk control, with measure in place to ensure overall risk of the portfolio is well contained. As we mentioned above, HSBC MPF is an advocate of sustainable investments and in our MPF Funds, ESG is already integrated in our management process whether they are active or passive, which we believe will provide long-term sustainable results to our members.
On the other hand, we are putting highest priority on meeting customer needs and our customer centric approach which add value to our schemes for our members. These include competitive fees and charges, administration services, technology platforms, diversified communications and our designated branches enable instant supports for members.
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