Both TDF and DIS are MPF products that automatically adjust their asset distribution as time goes by. Regardless of which one you opt for, its strategy will put a heavy focus on higher risk investments in the early stages, and shift to holding relatively safe bonds and cash in the late game. But this is where the similarities end.
TDF is a mixed assets fund with a portfolio composed mainly of stocks, bonds and cash. Let’s look at Fidelity’s SaveEasy 2040 Fund (the number suggests the year of retirement). As the target date draws closer, the investment portfolio will adjust itself – less stocks and other adventurous ventures, more bonds and cash holdings.
DIS is the default MPF option in any MPF schemes as ruled by the Mandatory Provident Fund Schemes Authority (MPFA). One can see it as the vanilla choice, made up of the Core Accumulation Fund (CAF) and the Age 65 Plus Fund (A65F). You will have invested in CAF before the age of 50; after which the holdings will automatically shift towards A65F until age 64.
While TDFs and DISs from different MPF trustees have their own unique perks, here is a general comparison between the two products:
If you ever feel too overwhelmed at work, or don’t feel like spending the effort to learn and manage yet another financial product, these two automated MPF plans are for you! Once committed, the entire investment process will be executed and finished by your trustee, so you are set on your career-long MPF investment plan without lifting a finger. TDF and DIS are not called the “funds for slackers” in town for nothing.
Performance and fees
Your highest concern is rightfully on the fares and how well your MPF fares. Fret not, for we at Planto have aggregated the vast swathes of market data below, so you can compare TDF and DIS performances according to your age and target retirement year.
Funds Comparison: Target Date Funds (TDF)
No suitable funds found for your age
Consider looking into a DIS fund instead
Funds Comparison: Default Investment Strategy (DIS)
3 moves to reorganise your MPF
If you are looking into restructuring your MPF portfolio and partitioning it to TDF, DIS or other MPF funds, here are three ways to do it:
- Instruct your MPF trustee (or your agent) to adjust your investment portfolio
- Combine your MPF accounts and entrust it to one trustee for investment management
- Open a tax deductible voluntary contributions (TVC) account to invest with the benefit of tax deduction
Disclaimer: Fund information is obtained from MPFA's MPF fund platform updated as of 31 July 2019. Fund expense ratios are latest information based on scheme providers' fact sheets.