The MPF includes actively managed ETFs, limited to those approved by the Securities and Futures Commission and listed in Hong Kong, with a maximum proportion of 10%. The Mandatory Provident Fund Schemes Authority expects to enhance return potential

The implementation of actively managed ETFs for Mandatory Provident Fund (MPF) investments has been finalized. The MPF Authority updated the investment guidelines for "stocks and other securities" today (10th), incorporating the entire asset class of actively managed ETFs into the permitted investment categories for MPF funds. However, the proportion must not exceed 10% of the fund's net asset value, and the actively managed ETFs must be approved by the Securities and Futures Commission (SFC) and listed on the Hong Kong Stock Exchange (388). Helping to Diversify Risks and Enhance Investment Returns The MPF Authority stated that this move responds to the rapid growth of the actively managed ETF market in Hong Kong in recent years, covering various asset classes such as money market and technology sector assets. It also indicated that actively managed ETFs can provide additional protection for plan members by diversifying risks, enhancing transparency, and improving liquidity. The inclusion of qualifying actively managed ETFs as permitted investment categories for MPF funds is expected to provide more competitive investment opportunities for MPF funds, while also offering plan members more opportunities to diversify risks and enhance their investment return potential, thereby better safeguarding and increasing retirement savings. Excluding Cryptocurrency Actively Managed ETFs It is noteworthy that the actively managed ETFs eligible for inclusion must be approved by the SFC and listed on the Hong Kong Stock Exchange, and must also comply with the relevant principles of permitted asset categories for MPF. For example, the actively managed ETFs must not be classified by the SFC as derivative product funds and must not be used as tools to circumvent MPF regulations, such as not investing in actively managed ETFs related to cryptocurrencies. Additionally, the initial limit on fund investments in actively managed ETFs must not exceed 10% of the fund's net asset value, and this limit will be shared with other approved asset categories, such as listed private equity funds and unlisted mutual funds. Hong Kong Actively Managed ETFs Cover Multiple Themes According to information from the Hong Kong Stock Exchange website, the currently listed actively managed ETFs in Hong Kong cover various assets, including those investing in AI and innovative technology themes such as A PanDu Innovation (3056) and AGX AI Technology (3006). There are also ETFs that invest in themes such as electric vehicles, robotics, Web3, and electronic payments, such as AGX Electric Vehicle Robotics (3139), A Metropolis WEB 3 (3426), and A Metropolis Electronic Payments (3412). Additionally, there are several actively managed ETFs investing in money market funds, such as A Southern Hong Kong Dollar (3053) and A ICBC Zhongjin US (3011). As for the popular covered call option products in recent years, such as AGX National Index Covered (3416) and A Southern National Index Covered (2802), they also fall under the category of actively managed ETFs. Next Steps to Explore Inclusion of Gold ETFs The Chairman of the MPF Authority, Liu Mai Jiaxuan, stated earlier this month at the Legislative Council's Financial Affairs Committee that a review of MPF investments in Real Estate Investment Trusts (REITs) has been completed. This year, the authority will continue to review the scope of MPF investments to include more diverse investment products, with the next step preparing to explore the direction of MPF investments in gold ETFs. Furthermore, the MPF Authority will complete a comprehensive review of the Default Investment Strategy (DIS) and formulate improvement recommendations by the end of 2026 to meet the needs of plan members Related articles: The Mandatory Provident Fund Authority considers including gold ETFs and Shanghai-Shenzhen REITs, with the MPF Easy plan reducing administrative fees to meet targets 5 years ahead of schedule