PEREGRINE Asset Management has launched a Hong Kong Equity Fund as one of the underlying funds for its pooled provident plan to invest in. The fund was created primarily to meet the requirements of the proposed Mandatory Provident Fund (MPF) which is scheduled to be submitted to the Legislative Council next month. Under the proposed MPF ordinance, employers must match the 5 per cent contributions of their workers in a provident fund. The ordinance also requires that any pension fund an employer subscribes to must have a 30 per cent weighting of Hong Kong assets. George Chan, director of Peregrine Asset Management, said his company would meet the weighting requirements by having its Peregrine Pooled Provident Fund invest in the Hong Kong Equity Fund. The Pooled Provident Plan is a four-fund combination which allows the employee of a company to choose the level of risk he wants in his retirement plan. He can choose from the high-risk Asian Equities Fund, the medium- risk Global Balance Fund and Stable Growth Fund, or the US Dollar Money Market Fund. Mr Chan said the high-risk fund was likely have an 18 to 20 per cent annual return, while the medium risk would be about 10 to 15 per cent. 'This is a concept that is relatively new to Hong Kong but has been running in the US for some years. 'Normally, an employer chooses a pension fund and an employee has to go along with the decision,' Mr Chan said. 'Although we are not the first to offer such a fund [in Hong Kong], it gives a someone more control over their financial future. 'The decision is theirs as to where they want to invest. For someone who follows the markets and the financial world, it's an ideal opportunity.' Mr Chan said the Global Balance Fund and the Stable Growth Fund, which were launched in July last year, would invest in the Hong Kong Equity Fund. 'We like global equity funds because most of the Asian countries have not been doing very well recently. 'We expect the global markets to do better because they are more diversified. 'The Global Balanced Fund is a model of the average fund because it has a good mix [of 70 per cent global equities and 30 per cent global bonds] and a high enough return to offset the inflation rate in Hong Kong,' he said. 'It is also a diversified investment in terms of the various markets and in equity and bond weighting. 'Among the Asian countries, we like Hong Kong because it is still the top area for investment in the long term,' Mr Chan said. He admitted Peregrine had not attracted many companies to the Pooled Provident Plan because the market as a whole was largely limited by the outcome of the MPF. 'Everyone is waiting to see what happens,' he said. 'Previously, many new schemes were being set up but, since last year, the trend has almost stopped. People want to see what happens with the MPF before setting up their own fund,' Mr Chan said. 'Once the legislation is passed, it will clear up a number of things. We don't expect a lot of business until the ordinance is passed and the requirement to contribute becomes mandatory. Some time in 1998, it will suddenly become a much larger [business] than this year.' He said because of the great volume of business the MPF would create, Peregrine was looking at joint ventures with other service providers such as banks and insurance companies.