Mandatory Provident Fund Long-term Planning BCT: Do Not Panic Due to Short-term Fluctuations

BCT stated that the global investment market performed well in February 2026, with most asset classes recording positive returns, and the MSCI ACWI index showing an increase of about 1.3%. The "AQUMON MPF Composite Fund Index + Inflation Index" for February was 1.8%, with a cumulative increase of 5.42% since the beginning of 2026. Although the ongoing conflict between the U.S. and Iran and geopolitical instability continue to affect the market, BCT reminds members that the Mandatory Provident Fund (MPF) is a long-term retirement plan, and there is no need to panic excessively due to short-term sharp declines. Eddie Wu, a director at IPP Financial Advisers Limited, reminded that with the escalation of the U.S.-Iran conflict, the market has accumulated significant gains over the past two months and is quite sensitive to negative news. In a high-volatility environment, investors may take profits and exit, so it is essential to be aware of the associated risks. According to BCT data, in February this year, the fund switching behavior of members showed that the total number of fund inflows in a single month exceeded the total number of outflows by more than 50%. Wang Yulin, Senior Director of Business Positioning and Client Solutions at BCT, analyzed: "In other words, for every fund that members switch out of, they often switch into more than one fund, indicating that they are beginning to realize the importance of diversification in investments." Over-concentration in a single market is "false diversification" Wang Yulin reminded that diversification in investments is not merely about investing in multiple funds. If MPF investments are overly concentrated in a single market or region, even if multiple funds are held, it still constitutes "false diversification" and may not effectively reduce risk. The true principle of diversification is to allocate funds across different asset classes and regions to mitigate the impact of fluctuations in a single market or asset. He also pointed out that while geopolitical turmoil certainly affects the market, members should not hastily make a complete switch due to a single event. Looking back at history, on April 7, 2025, the Hang Seng Index plummeted by 3,000 points due to the U.S.-China tariff war, and many members were caught in thoughts of "whether to stay put," "buying on dips," or "immediate hedging." However, the MPF market rebounded in April. "The MPF is a retirement plan that spans several decades, and members should base their decisions on long-term retirement goals, carefully review their MPF investment portfolios, and avoid over-reliance on a single market and asset class. At the same time, there is no need to panic or make hasty adjustments due to short-term fluctuations, as this may lead to missing out on potential gains from market rebounds, affecting long-term retirement security."