Fund managers' opposition fails to remove MPF restrictions

The Mandatory Provident Fund Office has no intention of relaxing proposed investment regulations to attract more fund managers to launch MPF products.

United States pension fund manager Templeton Franklin said last week it would not launch MPF products as the scheme contained too many investment restrictions, a view backed by other international fund managers.

It claimed the restrictions made the scheme too expensive to administer and undermined potential investment returns.

MPF office assistant director Raymond Tam Wai-man said: 'The MPF office has to ensure the scheme is managed in a prudent way in order to make sure contributions do not suffer as a result of high-risk investment strategies.' Existing proposals restrict fund managers from investing in over-the-counter derivatives, stipulate at least 30 per cent of all assets are held in Hong Kong dollar-denominated assets and state the funds must be registered in Hong Kong.

Managers of larger funds say these restrictions will limit potential returns and have urged that all three be revised or removed.

Mr Tam said: 'These requests are unacceptable. We will allow fund managers to use derivatives for hedging purposes but will not allow them to trade over-the-counter as the market is not sufficiently regulated.