BlackRock unveils two new index funds for MPF’s DIS

27 March 2017   Category: News, Asia, Global   By Asia Asset Management

New York-based BlackRock Inc has introduced two new index funds that have been specially designed for use in the soon-to-be-launched Default Investment Strategy (DIS) in Hong Kong’s Mandatory Provident Fund (MPF) schemes.

The funds – BlackRock World Equity Index Fund and BlackRock World Government Bond Index Fund – have been included in the Index Tracking Collective Investment Schemes, acting as benchmarks to measure the performance of DIS funds, BlackRock said in a statement.

The funds, which will track the FTSE MPF All-World Index and the Citi MPF World Government Bond Index, respectively, are domiciled in Hong Kong under the umbrella unit trust, BlackRock Premier Funds. Julia Lee, head of Hong Kong retail business at BlackRock, says in the statement that the new funds “provide investors with efficient, transparent and low-cost exposure to markets as they build diversified investment portfolios”.

The DIS will be introduced on April 1. Contributions from Hong Kong employees who have not made any investment choices for their MPF accounts will be invested in DIS funds.

Currently, there are about 610,000 MPF accounts without investment instructions, involving MPF assets of approximately HK$8.2 billion (US$1.05 billion), according to data from the Mandatory Provident Fund Schemes Authority (MPFA).

The MPFA requires each MPF scheme to offer a DIS to members who do not make any investment instruction. Each DIS fund has three features – globally diversified investment, automatic reduction of investment risk as scheme members approach retirement age, and fee caps.

BlackRock has provided investment options for MPF schemes for 14 years through its broad range of exchange-traded funds and index funds.

By providing investors with “cost-efficient and well-diversified options”, the company believes “both MPF schemes and non-MPF investors can easily manage and diversify their investments in equities and bonds globally”.

BlackRock managed US$5.1 trillion in assets globally as of December 31, 2016.