AIA-JF expand retirement choices with three new lifestyle funds

Leading MP F service provider AIA-JF is continuing to broaden its portfolio of investment options as the MP F scheme marks a decade. 

A pioneer in Mandatory Provident Fund products and one of the largest MPF service providers in Hong Kong, AIA-JF – a strategic alliance formed between American International Assurance Company, Limited and JF Asset Management Limited, has unveiled three new lifestyle funds with diversified portfolios offering varying allocations in equities, bonds and cash providing different risk and return levels as the MPF Scheme marks its 10th anniversary.

The funds, catering to the varying degrees of risk appetite and the unique investment objectives of retirement fund members, are managed by FIL Investment Management (Hong Kong) Limited. Available from December 1, 2010, these new funds increase the total number of fund choices to 21, further broadening the investment options available for MPF scheme members.

The three new funds, namely Fidelity Growth Fund, Fidelity Stable Growth Fund and Fidelity Capital Stable Fund, range from aggressive high-risk to conservative low-risk. The Fidelity Growth Fund invests in global equity markets and has the flexibility to invest in global bonds. It has a bias towards Hong Kong but maintains broad geographic diversification.

The Fidelity Stable Growth Fund invests in equities and bonds with a broad geographic diversification. This fund also maintains a bias towards Hong Kong.

The Fidelity Capital Stable Fund invests in bonds and cash, while also retaining some exposure to equities. Like the other two funds, it has a bias towards Hong Kong and maintains
broad geographic diversification.

Bonnie Tse, Senior Vice President and Managing Director of AIA Pension and Trustee Co. Ltd. - the Administrator of AIA-JF’s MPF schemes, says these new funds demonstrate the continuing commitment to introduce the best of the breed MPF products for the varying investment needs of members. Ms Tse is also the Chief Exceutive Officer of American International Assurance Company (Trustee) Limited.

AIAPT is a member of the AIA Group. AIA Group Limited is the largest, independent listed pan-Asian life insurance group in the world, with an unparalleled footprint spanning 15 markets in Asia Pacific. Ms Tse points out that FIL’s three lifestyle funds, “aim to further enrich the fund choices of our well-established multi-manager platform’’. “As the MPF system has been in operation for ten years, scheme members have gained considerable knowledge and become more investment-savvy when managing their MPF investments. They are looking for more quality fund options and that is why we introduced FIL to our platform,’’ Ms Tse adds.

AIA-JF is one of the leading providers of MPF services with about 700,000 members and 35,000 corporate customers. Innovative fund choices and services for MPF members have been a characteristic of AIA-JF over the past 10 years. When the MPF was first launched a decade ago, AIA-JF offered five core portfolios with simple and
easy-to-understand structures. And in 2002, as the market matured, four regional / single-country equity funds, namely North American Equity Fund, Japan Equity Fund, European Equity Fund and Hong Kong Equity Fund, were introduced. These funds widened the investment options offering access to developed economies.

In 2004, two more equity funds, namely Greater China Equity Fund and Asian Equity Fund were added to the range. AIA-JF was the first to introduce Greater China Equity Fund in the Hong Kong MPF market.

Later, AIA-JF opened its manager platform to third party manager by adding three RCM funds in 2005 and Green Fund in 2006. 

To meet members’ demand for funds with lower management fees, AIA-JF introduced Global Bond Fund and World Equity Fund in 2007. 

In 2008, AIA-JF introduced the Manager’s Choice Fund with a dynamic asset allocation strategy for members who wish to have a mixed assets portfolio but have limited knowledge and time for fund switching by themselves. Fund products continue to improved, while service levels are upgraded for member convenience. Seminars have been organised and an “MPF Academy’’ set up to train intermediaries, among other initiatives. Members can understand more about products and services by accessing AIA-JF’s website. Members can also check on the performance details of various funds through the website. Some services on offer also go beyond the regulatory requirements, Ms Tse says. While regulations require only one annual statement to MPF members, for example, the firm provides quarterly statements. Statements are also provided electronically, when members request the service. One of the innovative services offered to members is LifeEasy, which enables rebalancing of assets in constituent funds (World Equity Fund, Global Bond Fund and Guaranteed Portfolio) according to a pre-determined mix. It is based on a member’s birthday and assets are allocated according to the number of years to retirement. 

For example, for an MPF scheme member below the age of 50, the entire allocation will be in the World Equity Fund, while for anyone between 62 and 63 the predefined mix would be 30 per cent in the World Equity Fund, 40 per cent
in the Global Bond Fund and 30 per cent in the Guaranteed Portfolio. The rebalancing is done when a member signs up and it is optional. 

Among the constituent fund choices, one of the more innovative offerings – useful for those members who do not have an adequate understanding of asset allocation – is the Manager’s Choice Fund. 

“The manager has the flexibility to switch between equities or bonds … up to 90 per cent equities, or up to 90 per cent bonds. This depends on the market situation. It is a forwardlooking strategy fund and the risk rating is the same as the Growth Portfolio,’’ says Ms Tse. 

AIA-JF has been first to market with a several innovative ideas for members of MPF schemes. In 2004, it was the first to launch the Greater China Equity Fund investing in Hong Kong, China and Taiwan, and also launched a Green Fund in 2006, investing in companies rated according to their environmental credentials.