MPFs have had lackluster performances in the past 6 months. According to data provided by MPF Rating, the fund recorded a loss of 12.96% in the first half year, which is the worst interim performance since the launch of MPF. The average balance for an MPF account is currently at HKD$230700, with a 10.55% decline year to date.

With high market volatilities, conservative funds had satisfying performances compared with the majority of the funds. However, MPF is a long-term investment, the policyholders should consider not only the short-term market fluctuation but also long-term returns and personal needs when purchasing funds. Here are 5 common types of MPF the investors should know:

1. Equity Fund
Returns and risks go hand in hand. Equity Funds mainly invest in the stock market and require a relatively high risk-tolerate level. Equity Funds can be categorized into 3 types: investing in a single market, regional market or global market. Since the fund prices may be affected significantly by stock market volatility and changes in exchange rates, they are more suitable for investors who are risk tolerant and have long investment horizons.

2. Mixed Assets Fund
Mixed assets funds primarily invest in a combination of bonds and stocks. The risk level of a mixed assets fund depends on its investment proportions of bonds and stocks, the greater investment in stocks, the high risk associated. As needs change with various life stages, the policyholders can invest in target date funds, life cycle funds, or even rebalance their assets according to personal needs.

3. Bond Fund
Bond Funds invest in bonds or debt instruments to earn profit from interest, coupon rates, or bond trading. Although bond funds are usually viewed as lower-risk investments, fund prices and returns may be affected by fluctuations in interest rates, exchange rates and credit rating of bonds.

4. Guaranteed Fund
Guaranteed Funds generally guarantee the initial invested capital or minimum rate of returns to the policyholders and have relatively low risk associated. Since most guaranteed funds in the market are conditional guarantees, the conditions must be fulfilled to ensure guarantees are imposed. Therefore, the policyholders should be highly aware of the qualifying conditions

5. MPF Conservative Fund
MPF Conservative Fund mainly invest in short-term bonds and bank deposits. Since MPF conservative funds are low-risk investment products, there would be negative returns when the return rates are lower than the inflation rate.