There is definite proof that sustainability-focused funds are outperforming their conventional counterparts. But some experts believe the traditional explanations for this are wrong.
It follows the launch in January, 2005 of Axa China RegionÆs multi-manager solution for the Hong Kong retirement schemes market, in which an Australian-based unit owned by AxaÆs parent, iPac, handles fund manager selection and monitoring.
The investment managerÆs ôRetirement Master Trustö, which is dedicated to members of the Mandatory Provident Fund, will see four new funds added to the nine existing self-managed funds.
On FideliltyÆs ôAdvantage Portfolioö platform û dedicated to the Orso market û four new multi-manager lifecycle funds will be added to the current 10 Fidelity-only funds.
This platform will also feature six new supermarket funds, giving members access to unit trusts from third-party fund managers. These new feeder funds will invest in a range of third-party funds, including First StateÆs Hong Kong Growth Fund and Franklin TempletonÆs Global Fund.
These new funds, all designed to offer specific risk exposure, are part of FidelityÆs ôTotal Retirement Solutionö, which aims to provide specialist investment advice tailored to an individualÆs specific circumstances.
John Ford, managing director of Fidelity in Hong Kong, says the launch is down to an ôincreasingly active demand for information from members, but an overwhelming difficulty in finding information thatÆs relevant to themö.
With the rapid movement from defined benefit to defined contribution pensions in Hong Kong, the investment risk has transferred from employer to member.
Yet according to recent figures from the MPF, 30% of the of the fundÆs HK$146.3 billion pot is invested in guaranteed funds, money market funds, or capital-preservation funds, all of which have returned between 0.35% and 5.2% per annum for the last three years. This compares to a 23.1% return for Hong Kong equities over the same period.
Ford says: ôThis simply represents a lost opportunity. What weÆre hoping to encourage is people moving out of cash and guaranteed funds into something that suits their particular situation. ItÆs all about being in the right fund at the right stage in the life-cycle.ö
He adds that people too many people seem to have forgotten the lessons of the mid-1990s, when inflation hit 10%.
Fees on the new multi-manager funds are set at 95 basis points, a 20bp premium to the self-managed funds. But FidelityÆs investment director and head of institutional business, Nick Rogers, says too much importance was generally placed on fees.
ôWhat really counts is the long-term performance. 25 basis points are not going to make an enormous difference at the end of the day if the member is in the right fund for his circumstances.ö
The funds will also feature a same-day fund switching capability, at no cost to the fund-holder.
Fidelity currently manages about 260,000 MPF accounts from more than 1,000 companies throughout Hong Kong.
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