Target Date Fund (TDF) and Default Investment Strategy (DIS)
Target Date Fund (TDF) and Default Investment Strategy (DIS)
Career
 • 
Target Date Fund | 
Default Investment Strategy

September 17 • 5 min read

語言: 廣東話

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:

TDF
Target Date Fund
DIS
Default Investment Strategy
Options for year of retirement available
The retirement age is locked at 65
Actively managed by fund manager and will make adjustments according to market conditions. Allocation will be more conservative as it draws closer to target retirement year.
Asset distribution adjusts automatically between CAF and A65F after the age of 50, switching gradually to more conservative assets
More aggressive
Up to 90% of the fund in stocks early, and up to 30% in later stages
More conservative
Up to 60% of the fund in stocks early, and up to 10% in later stages
More data available
as the product has been launched for some time
Less data available
as the product was launched as recently as two years ago
Offered by only a smaller number of MPF trustees
Offered by all MPF trustees
Higher fees
Lower fees
(with fee caps from MPFA)

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)

I'm currently
I'll retire when I'm
Sort by
No suitable funds found for your age
Consider looking into a DIS fund instead

Funds Comparison: Default Investment Strategy (DIS)

I'm currently
Less than 50 years
50 years or older
If you're less than 50 years old, your portfolio will be 100% CAF
Sort by

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:

  1. Instruct your MPF trustee (or your agent) to adjust your investment portfolio
  2. Combine your MPF accounts and entrust it to one trustee for investment management
  3. 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.

#Target Date Fund
#Default Investment Strategy
Share:
Manson Yau
Working for almost 10 years in journalism while accomplishing small life goals of owning a home and starting a family, my personal finance rule number one is “never rely on a single source of income”. The next challenge is learning to be a working father.
Contacthello@planto.hkfor blog content collaboration

Track. Plan. Get advice.

Making your finances easier

22/F, 3 Lockhart Road, Wan Chai, Hong Kong
Planto Limited © 2019
Planto - HK #1 Money Tracker
Making your finances easier