The Hong Kong Monetary Authority may make more use of outside fund managers and allow more deviations from benchmark indices in an effort to achieve a higher investment return for the Exchange Fund, but its chief executive has warned against inflated expectations.
'We always keep on fine-tuning,' Joseph Yam Chi-kwong said. 'But our investment benchmark hasn't changed, so no one should have any unreasonable expectations for returns.'
The authority, which manages the HK$1.1 trillion Exchange Fund, came under criticism from some lawmakers and financial professionals after managing a return of only 3.1 per cent last year. Investment income fell 33 per cent last year to HK$38 billion.
Under its investment policy, 77 per cent of the fund must be invested in bonds and 23 per cent in equities while most of its investments must track benchmark indices. About 88 per cent of its portfolio is in US dollar-bloc (including Hong Kong dollar) assets.
Mr Yam said the authority might make more use of external fund managers with special expertise while deviations from benchmark indices would be allowed if they helped to improve returns.
However, he said the Exchange Fund had its own objectives, making it inappropriate to compare it with other funds. The priority is to keep enough reserves to maintain the stability of the Hong Kong dollar and the financial system.
