The performance of the MPF Default Investment Strategy lagged behind average provident funds by 80 percent and only 12 percent of investors chose the former actively and passively, according to survey conducted by Convoy Financial Services and the University of Hong Kong.
The DIS, offered by the Mandatory Provident Fund Schemes Authority, is an investment solution with two mixed funds of equity and bond and it charges the lowest administrative fee in the market at only 0.9 percent. The average market rate is about 1.5 percent. The survey found that the DIS was not popular due mainly to insufficient understanding of the solution and lack of confidence in it by the public.
Convoy chief executive Henry Shin called on the MPFA to exert more effort on advertising and disseminating information about the DIS to the public.
Since the DIS was launched last week, its Core Accumulation Fund posted a 7.97 percent gain, while its Age 65 Plus Fund gained 2.94 percent.
Meanwhile, other Hong Kong equity funds posted a 22.45 percent growth during the period, while Greater China equity funds gained 22.44 percent.
Meanwhile, Convoy saw a 20 percent growth in the Mandatory Provident Fund Index between January and October this year.
It expects a 15 to 20 percent annual growth if no significant turbulence occurs, said Kenrick Chung Kin Keung, director of Convoy's MPF department.
Growth has been greatly driven by the positive stock markets especially in Hong Kong and the mainland, with 54.1 percent of poll respondents investing in equity funds, according to the survey.
Shin said Convoy remains confident in Asian stock markets excluding Japan, especially emerging markets in Southeast Asia.
However, he said investors should diversify their portfolios as stock markets face risks, such as North Korea.