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MPF intermediaries
MPFMPF Intermediaries ExaminationIIQE MPF · Topic 5
MPF exam chapter 5 (17% of the paper): the Default Investment Strategy (CAF, A65F, de-risking and fee caps), the MPF Conservative Fund rules, the 30% Hong Kong dollar exposure rule, fees, the fund expense ratio and disclosure.
7 min read5 sections
Checked against the MPF Study Notes, Tenth Edition (June 2026; for exams from 1 Oct 2026), chapter 5, and the MPFA pages on the Default Investment Strategy (DIS FAQ last reviewed 30 Apr 2026) and MPF Conservative Funds. Reviewed 6 Nov 2026.. Independent prep, not endorsed by the MPFA or any examination provider.
Chapter 5 is 17% of the paper, the third heaviest. The DIS and the MPF Conservative Fund supply most of its questions because both are full of fixed numbers.
The DIS has been required in every MPF scheme since 1 April 2017. It is a ready-made arrangement for members who do not choose funds, or who have no time to manage them, and members can also pick it deliberately. Any benefits for which a member gives no fund choice must be invested under the DIS.
| Core Accumulation Fund (CAF) | Age 65 Plus Fund (A65F) | |
|---|---|---|
| Higher-risk assets (mainly global equities) | About 60% | About 20% |
| Lower-risk assets (mainly global bonds) | About 40% | About 80% |
| Who holds it under the DIS | Members under 50: all their DIS money | Members 64 and over: all their DIS money |
De-risking. From age 50, each year on the member's birthday, part of the CAF holding is moved to the A65F following a set table. By 64 everything sits in the A65F. If the trustee does not know the member's age, everything goes into the A65F. De-risking does not happen when a member picks the CAF or the A65F as standalone funds instead of the DIS.
Fee caps. Management fees for the CAF and A65F, covering the trustee, the eMPF Platform company, investment managers, custodians and underlying funds, may not exceed 0.75% a year of net asset value. Recurrent out-of-pocket expenses, such as audit, printing, postage and the compensation fund levy, may not exceed 0.2% a year; both the notes and the MPFA's DIS FAQ (last reviewed 30 Apr 2026) say this falls to 0.1% once the trustee and scheme have onboarded the eMPF Platform.
Every note. Every question. One pass.
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A ready-made strategy every MPF scheme must offer since 1 April 2017. It uses the Core Accumulation Fund (about 60% higher-risk assets) and the Age 65 Plus Fund (about 20%), and moves money from the first to the second each year from age 50, so everything is in the Age 65 Plus Fund by 64.
Management fees of no more than 0.75% a year of net asset value, and recurrent out-of-pocket expenses of no more than 0.2% a year, which the MPFA says reduces to 0.1% after the trustee and scheme onboard the eMPF Platform (MPFA DIS FAQ, last reviewed 30 Apr 2026).
No. It holds only Hong Kong dollar short-term deposits and debt with an average maturity of no more than 90 days, and it can charge administrative expenses in a month only if its return beats the prescribed savings rate, but its return can still lag inflation.
Trap: de-risking is automatic only inside the DIS. A member who chose the CAF on its own stays 60% in higher-risk assets at any age.
Takeaway: DIS since 1 April 2017; CAF 60/40, A65F 20/80; de-risk from 50, all A65F by 64; caps 0.75% fees and 0.2% expenses (0.1% after eMPF onboarding).
Every MPF scheme must offer at least one MPF Conservative Fund, a low-risk option. It is not a guaranteed fund, and in times of high inflation its return can fall behind inflation.
| Rule | Requirement |
|---|---|
| Currency | 100% Hong Kong dollar investments |
| What it holds | Short-term bank deposits and short-term debt securities issued or guaranteed by a government or similar authority, or meeting the MPFA's minimum short-term credit rating |
| Maturity | Average remaining maturity of the portfolio no more than 90 days |
| Banned | Equities and commodities |
| Reporting | Monthly reporting to the MPFA |
| Charges | No initial fees, redemption charges or bid-offer spreads |
| Administrative expenses | Deductible in a month only if the fund's earnings for that month exceed what the prescribed savings rate would have earned |
The prescribed savings rate is declared by the MPFA. Its public guidance describes it as the simple average of the Hong Kong dollar savings rates offered by the three note-issuing banks, and says that expenses skipped in a low-return month may be recouped from excess returns in any of the following 12 months (MPFA article on MPF Conservative Funds, Feb 2023).
Its two objectives are a low-risk product with minimal exposure to market swings, and a net return comparable to banks' Hong Kong dollar savings rates.
Trap: a fund being conservative does not make it principal-protected. The MPF Conservative Fund can still lose value; it simply cannot be pushed negative by its own administrative fees.
Takeaway: at least one per scheme; 100% HKD, 90-day average maturity, no equities; fees only in months that beat the prescribed savings rate; never guaranteed.