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Primed for MPF reforms

Category: Hong Kong

Fidelity firmly focussed on members’ retirement issues

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The introduction of the Employee Choice Arrangement (ECA) to Hong Kong’s Mandatory Provident Fund (MPF) scheme has been slated for this November. As such, MPF provider Fidelity is gearing up to meet the new requirements of its members who will be given the responsibility of managing their MPFs, manoeuvring their funds and hypothetically switching providers.

KP Luk, head of Hong Kong institutional business at Fidelity, explains that any reforms taking place will be subject to approval from the MPFA. However he does add that the MPF industry in general expects the ECA to be in place by November this year. “Some surveys have revealed that about 30% of members will consider a switch when the ECA becomes effective,” says Mr. Luk. However, he does note that many of these decisions are likely to depend on the actual administration work involved and time taken to process transfers and so on.

Fidelity has already put in place a number of initiatives for members when it comes to preparing for and adapting to the reforms in terms of investor education, Mr. Luk says: “At Fidelity, we understand the complexity of retirement planning – for employers, the challenges relating to the management of retirement schemes, and for members, the challenge of preparing financially for retirement.”

Mr. Luk goes on to disclose that since Fidelity pioneered its Total Retirement Solution in 2006 – an integrated platform for retirement planning in Hong Kong which encompasses thought leadership activities, product innovation, easy management of accounts as well as education and guidance – “we have committed to this charter over the years through multiple initiatives.” These initiatives include Fidelity myPlan, which is an easy-to-use retirement-goal calculator; enhancing the website to include a fresh look, richer information and a greater array of tools; Fidelity educational videos that provide useful guidance to members on managing their investments more effectively; and periodical e-newsletters filled with useful information and insights on a wide variety of investment topics in order to help members invest responsibly.

On top of this, Fidelity’s commitment to retirement education includes conducting investment seminars, member briefings and education sessions for both employers and members. “All in all, education on retirement issues and building awareness of the MPF amongst members is our main focus,” notes Mr. Luk.

In terms of size, Fidelity is the largest pure investment manager among the top ten MPF service providers in Hong Kong (source: Towers Watson, 31/12/2011), and has been awarded a number of accolades in recent times. These include:

• “Hong Kong: Best Client Servicing – MPF” at the Asia Asset Management Best of the Best Country Awards in 2010 and 2011;

• “Best Hong Kong MPF Scheme Provider” at the AsianInvestor Investment Performance Awards in 2010 and 2011;

• “Best Mixed Assets Group Award over 3 Years” at the Lipper Fund Awards Hong Kong 2012.

“All these awards are testament to our extensive investment capabilities, excellent client services, and our ongoing commitment to having a strong investment team that can provide consistent long-term performance,” says Mr. Luk.

Mr. Luk goes on to point out that the company’s success has been built on a number of factors, primarily its determination and persistence in providing dedicated professional services for its MPF members. This has been achieved through the provision of a comprehensive range of MPF funds that demonstrate solid and consistent performance, as well as offering competitive fees.

“Our dedication to investment management with intensive company research sets us apart,” says Mr. Luk. “We are active managers who place meticulous fundamental research at the heart of the investment process. We believe that markets are only semi-efficient, meaning that markets, sectors and stocks can be overvalued or undervalued at any point in time and that research can uncover profitable opportunities.”

Mr. Luk explains that Fidelity’s approach is based on bottom-up fundamental analysis. “Our portfolios are built from the bottom up, security by security, taking account of general market trends but not being driven by them. Portfolio managers are responsible for their funds and encouraged to develop their individual flair, while benefiting from our global research,” he says.

In regard to how the MPF system be further improved in the next three to five years, Mr. Luk points to three developments that could enhance it: “The development of annuity-type products which can produce income to MPF members post retirement; by enhancing administration systems among trustees to shorten the length of time required for asset transfers between MPF schemes; and through the encouragement of voluntary contributions from members via the introduction of tax incentives.”

Fidelity, Fidelity Worldwide Investment, the Fidelity Worldwide Investment logo and F symbol are trademarks of FIL Limited.

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