AXA Hong Kong launched the territory's first multi-manager fund for MPF members yesterday (January 20), stating that the four-year old retirement programme has now reached a turning point in its existence.
AXA's Elite MPF concept will draw on the multi-manager experience of ipac asset management, which it acquired in 2002. The introduction of the Elite MPF by AXA follows a global trend towards multi-managers - the fastest engine in the funds world over the past four years.
Upon rollout, the new multi-manager MPF product will employ an array of global heavyweights from the fund management industry including Alliance Bernstein Institutional Investment Management, Allianz Dresdner Asset Management, AXA Rosenberg, Capital International, Schroders, Lloyd George and PIMCO. Aside from offering a smorgasbord of diverse international managers, the Elite MPF concept also offers five unique fund choices for members with wide-ranging asset allocations.
The multi-manager Hong Kong equity fund will likely consist entirely of local equities and although the return is expected to be prone to short-term fluctuations, it aims to achieve high capital growth over the long term. Both the multi-manager growth fund and multi-manager balanced fund will predominately consist of global equities with varied allocations into global bonds and deposits.
The former carries a higher risk profile due to its high exposure to equities, whereas the greater allocation to bonds (10% to 40%) in the balanced fund suggests a medium to high risk profile. For the more risk adverse, the multi-manager stable fund will likely allocate between 45%-75% in global bonds, 15%-45% in global equities and a sizable chunk in deposits.
Also on the low risk side, the capital preservation fund strives to achieve a return in line with the "prescribed savings rate" published by the Mandatory Provident Fund Schemes Authority and is expected to achieve its investment objective in most months.
"AXA's Elite MPF is the first of its kind in Hong Kong and marks a major step forward for MPF in Hong Kong," says Mark Wilson, chief executive officer, AXA China Region. "We're now at the turning point of MPF in Hong Kong and with the Elite MPF concept, a new era of simplicity to MPF members is starting."
According to AXA, the key drivers of the multi-manager concept are: the reduction of risk compared to single managers; the ability to diversify across asset class, diversify spread over securities and across managers with different investment styles. The group also stresses that its 2002 purchase of ipac was motivated by the eventual rollout of such a product and that the firm's experience in multi-management was a critical element of the equation.
"Unlike a single manager fund where you have just one manager looking after all the asset classes and investments, multi-manager offers specialists for each type of investment," comments Arun Abey, executive chairman of ipac securities. "With multi-managers you have a number of managers within each asset class. These managers concentrate on specific investments within the sector portfolio and well placed to deliver enhanced performance."
The rollout of the Elite MPF concept comes at a time when consumer interest and account balances in the retirement scheme is growing. Data supplied by AXA states that the average MPF account balance is now around $HK48,000 (over $6,000) and is further backed up by a global retirement survey conducted by AXA, wich shows the citizens of Hong Kong are preparing for retirement at an earlier age.
"MPF in Hong Kong has just had its fourth birthda and the average MPF member should have a total investment in their MPF fund equivalent to about half of one's years salary," says Wilson. "This means that MPF members, trustees and their employees are focused on the investment performance of their retirement funds more than ever before. AXA's new MPF product provides a new generation of MPF investment options for Hong Kong people."
AXA concludes that the multi-manager approach lets professionals handle the emotionally charged decision-making that goes into choosing a fund for retirement and deal with concerns over inconsistent returns. ipac asset management has over 10 years worth of expertise in the multi-manager space and as of June 2004 managed approximately A$8 billion for retail and wholesale clients in Australia and around the world.