Hong Kong Shue Yan College ECON 310 Financial Institutions in Hong Kong Term Paper 2006 Fall

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Hong Kong Shue Yan CollegeECON 310Financial
Institutions in Hong KongTerm Paper 2006 Fall
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The Comparison between the MPFs provided byBank
(HSBC) and Insurance Company (Manulife)
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Section 4, Group 6

• 044012 Christy, Cheung Wai Hung
• 044013 Annie, Chong Suet Yan
• 044018 Roxanne, Yu Kwan Yee
• 044028 Carrie, Ho Ka Lai
• 044040 Quin, Leung Pui Shan
• 044052 Katy, Lee Wai Kit

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Introduction of MPF

• pension plan

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What is a pension plan?

• an asset pool
• represent the fastest-growing financial
  intermediary.

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Reasons pension plan becomes popular

• Life expectancy increase
• Ageing problem

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Type of pension plans

• Private Pension Plans
• Public pension Plan
• Sponsored by a governmental body. e.g., MPF

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Public pension Plan

• Mandatory Provident Fund (MPF)

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Key features of the MPF

• Coverage and Exemption
• Coverage Employee, Employer, Self-Employed
  Person
• Exempt persons Domestic employees, Self-employed
  hawkers

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Key features of the MPF

• Contributions
• Both employers and employees pay a minimum
  contribution of 5 of relevant income
• Self-employed persons have to contribute 5.

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Key features of the MPF

• minimum and maximum levels of relevant income
  are
• Minimum - HK4,000 per month
• Maximum - HK20,000 per month
• can withdraw accrued benefits in a lump sum at
  the age of 65

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Key features of the MPF

• Immediate Vesting
• Contributions paid and investment earnings are
  fully and vested with the member as accrued
  benefits.

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Key features of the MPF

• Portability
• When a member changes job, benefits can be
  transferred
• Preservation
• Benefits will be preserved and became payable
  at age of 65 or die

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Description of HSBC and Manulife

• Background of HSBC

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Background of HSBC

• one of the worlds largest banking and financial
  services organizations
• operated in Hong Kong more than 140 years
• has over 9,700 offices in 77 countries and
  territories

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Background of HSBC

• The leader position in the pension market
• HSBC and subsidiary Hang Seng Bank have secured
  400,000 employees for MPF
• 40 targeted market share in the MPF business.

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MPF Product in HSBC

• HSBC offers two master trust schemes
• SuperTrust
• SuperTrust Plus

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SuperTrust MPF Scheme

• members with less investment experience
• investment time frames from short to long term

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SuperTrust MPF Scheme

• 5 different funds
• Capital Preservation Fund (low-risk)
• Guaranteed Fund (low-risk)
• Balanced Fund (medium-risk)
• Growth Fund (high-risk)
• Hang Seng Index Tracking Fund (high-risk)

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SuperTrust Plus MPF Scheme

• members with a greater investment knowledge and
  experience
• In addition to 5 SuperTrust Funds, it offers 5
  more funds

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SuperTrust Plus MPF Scheme

• Stable Growth Fund (medium-risk)
• Asian Equity Fund (high-risk)
• European Equity Fund (high-risk)
• Hong Kong Equity Fund (high-risk)
• North American Equity Fund (high-risk)

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HSBC MPF Service

• Quality MPF Management
• Keeping information up to date
• Smart Money Management and Fund Switching

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HSBC MPF Service

• providing convenient communication
• Hotline
• Website
• Branch and ATM network

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Description of HSBC and Manulife

• Background of MAULIFE

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Background of MAULIFE

• conducts business in Hong Kong for more than 100
  years
• expanded into MPF market since 2000
• one of the largest player in the MPF market
  (15.5 market share)

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Background of MAULIFE

• more than 720,000 pension accounts
• managing pension assets at about HK307 billion

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MPF Product in MANULIFE

• Two MPF schemes
• Manu-Lifestyle (MPF) Scheme
• Manulife Global Select (MPF) Scheme

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Manu-Lifestyle (MPF) Scheme

• provided to conservative investors
• Simple and efficient approach

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Manu-Lifestyle (MPF) Scheme

• 5 different Funds
• Capital Preservation Fund
• Interest Fund
• Stable Fund
• Growth Fund
• Aggressive Fund

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Manulife Global Select (MPF) Scheme

• provided to sophisticated and conservative
  investors
• offers a choice of investment expertise and
  extensive range of funds

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Manulife Global Select (MPF) Scheme

• provides eleven more funds than Manu-lifestyle
  Scheme
• provide a very aggressive high-risk option
• Manulife MPF China Value Fund

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Manulife MPF Service

• computerized call center
• personal visits
• customer-oriented seminars

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Manulife MPF Service

• Newsletters
• regular benefit statements
• on-line service centre
• Smart Call telephone service.

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Comparison between the MPF Scheme of HSBC and
Manulife
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III. Comparison between the MPF Scheme of HSBC
and Manulife

• Two MPF Scheme
• Low-risk Fund
• Medium-risk Fund
• Aggressive High-risk Fund

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Manu-lifestyle Scheme vs. HSBC Super Trust Scheme
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Manu-lifestyle Scheme vs. HSBC Super Trust Scheme

• provided to conservative investors
• provided to less investment experience investor

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Manu-lifestyle Scheme vs. HSBC Super Trust Scheme

• Conservative Low-Risk Fund
• Manulife
• Capital Preservation Fund
• Interest Fund
• HSBC
• Capital Preservation Funds
• Guaranteed Fund

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Manu-lifestyle Scheme vs. HSBC Super Trust Scheme

• Capital Preservation Funds
• mandated by the MPF Schemes Ordinance
• do not have a guarantee of capital and interest

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Manu-lifestyle Scheme vs. HSBC Super Trust Scheme
Manu-lifestyle Scheme HSBC Super Trust Scheme
Performance as at October 31 2006 Capital Preservation Fund Capital Preservation Fund
Since Launch () 5.78 15

• invest in grade Hong Kong dollar denominated
  monetary instruments

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Manu-lifestyle Scheme vs. HSBC Super Trust Scheme

• Manulife Capital Preservation Fund
• mainly hold Hong Kong Bonds
• stable return as the prescribed savings rate
  published by the MPFA
• HSBC Capital Preservation Fund
• 100 hold in Hong Kong dollar denominated
  monetary instrument
• achieve a rate of return higher than the average
  bank saving rate

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Manu-lifestyle Scheme vs. HSBC Super Trust Scheme
Manu-lifestyle Scheme HSBC Super Trust Scheme
Performance as at October 31 2006 Interest Fund Guaranteed Fund
Since Launch () 1.65 0.4
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Manu-lifestyle Scheme vs. HSBC Super Trust Scheme

• Manulife MPF Interest Fund
• fully hold in Hong Kong Bonds
• interest rate is determined by the bond interest
• HSBC Guaranteed Fund
• nearly 50 hold in equity
• provide 0.25 interest rate per annually

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Manu-lifestyle Scheme vs. HSBC Super Trust Scheme

• conservative medium-risk fund
• Manulife MPF Stable Fund vs. HSBC Balanced Fund
• Provide capital growth

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Manu-lifestyle Scheme vs. HSBC Super Trust Scheme
Manu-lifestyle Scheme HSBC Super Trust Scheme
Performance as at October 31 2006 Stable Fund Balanced Fund
Since Launch () 16.75 32
HSBC invest more equity than Manulife
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Manu-lifestyle Scheme vs. HSBC Super Trust Scheme

• Manulife MPF Stable Fund
• mainly in bonds
• with an interest guarantee upon the occurrence of
  certain pre-determined events
• HSBC Balanced Fund
• Assets Portfolio mainly in equity
• No interest guarantee

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Manu-lifestyle Scheme vs. HSBC Super Trust Scheme

• Compare the Aggressive high-risk fund
• Manulife
• Growth Fund
• Aggressive Fund
• HSBC
• Growth Fund
• Hang Seng Index Tracking Fund

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Manu-lifestyle Scheme vs. HSBC Super Trust Scheme
Manu-lifestyle Scheme HSBC Super Trust Scheme
Performance as at October 31 2006 Growth Fund Growth Fund
Since Launch () 34.22 32.1
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Manu-lifestyle Scheme vs. HSBC Super Trust Scheme

• Growth Funds
• helped to maximize the investment return
• mainly in equity

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Manu-lifestyle Scheme vs. HSBC Super Trust Scheme

• Manulife Aggressive Fund vs. HSBC Hang Seng Index
  Tracking Fund
• Provide long term capital growth

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Manu-lifestyle Scheme vs. HSBC Super Trust Scheme
Manu-lifestyle Scheme HSBC Super Trust Scheme
Performance as at October 31 2006 Aggressive Fund Hang Seng Tracking Fund
Since Launch () 33.18 41.10
Better Performance of Hang Seng Index in recent
year
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Manu-lifestyle Scheme vs. HSBC Super Trust Scheme

• Manulife MPF Aggressive Fund
• a unitized equity fund
• mainly in equities and equity-related
  investments.
• Hang Seng Index Tracking Fund
• Invest in Hang Seng Index
• the performance of the Hang Seng Index

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Manulife Global Select Scheme vs. HSBC Super
Trust Plus Scheme
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Manulife Global Select Scheme vs. HSBC Super
Trust Plus Scheme

• provided to a greater investment knowledge and
  experience investor
• offers a choice of investment expertise
• extensive range of funds

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Manulife Global Select Scheme vs. HSBC Super
Trust Plus Scheme

• Compare the conservative low-risk fund

Manulife Global Select Scheme Performance since launch as at October 31 2006 () HSBC Super Trust Plus Scheme Performance since launch as at October 31 2006 ()
Interest Fund 1.65 Guaranteed Fund 0.4
Capital Preservation Fund 5.78 Capital Preservation Fund 15
Hong Kong Bond Fund 11.37
International Bond Fund 23.81
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Manulife Global Select Scheme vs. HSBC Super
Trust Plus Scheme

• Different Asset Portfolio
• Manulife have more funds than HSBC

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Manulife Global Select Scheme vs. HSBC Super
Trust Plus Scheme

• Compare the conservative medium-risk fund

Manulife Global Select Scheme Performance since launch as at October 31 2006 () HSBC Super Trust Plus Scheme Performance since launch as at October 31 2006 ()
Stable Fund 16.75 Balanced Fund 32
North American Equity Fund -9.15 Stable Growth Fund 30.2
European Equity Fund -3.32
International Equity Fund 8.36
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Manulife Global Select Scheme vs. HSBC Super
Trust Plus Scheme

• Negative return in two Manulife funds
• Significant loss in Asset Portfolio in North
  American and European
• Difference in return
• Manulife mainly hold bonds
• HSBC hold nearly 50 in equtiy

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Manulife Global Select Scheme vs. HSBC Super
Trust Plus Scheme

• Compare the Aggressive high-risk fund

Manulife Global Select Scheme Performance since launch as at October 31 2006 () HSBC Super Trust Plus Scheme Performance since launch as at October 31 2006 ()
Fidelity stable Growth Fund(Launch at Sept 1 2003) 35.21 Asian Equity Fund 103.8
Growth Fund 34.22 European Equity Fund 26.8
Hong Kong Equity Fund 39.04 Growth Fund 32.1
Japan Equity Fund 27.92 Hang Seng Index Tracking Fund 41.1
Pacific Asia Equity Fund 56.34 Hong Kong Equity Fund 47.2
Fidelity Growth Fund(Launch at Sept 1 2003) 59.72 North American Equity Fund -15.9
Aggressive Fund 33.18
China Value Fund(Launch at Feb 1 2006) 21.5
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Manulife Global Select Scheme vs. HSBC Super
Trust Plus Scheme

• Negative return in HSBC funds
• Significant loss in Asset Portfolio in North
  American
• Significant return in HSBC Asian equity
• Include in invest in China equity
• Manulife provide a stable positive return

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III. Comparison between the MPF Scheme of HSBC
and Manulife

• Conclusion
• Manulife Global Select Scheme and HSBC Super
  Trust Plus MPF Scheme are similar.
• Manulife have provided six more funds than HSBC
• Manulife performance is on average

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III. Comparison between the MPF Services of HSBC
and Manulife

• Compare these additional services of the Manulife
  and HSBC in the following aspects
• Hotlines
• Website

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III. Comparison between the MPF Services of HSBC
and Manulife

• Seminars
• Newsletters
• Regular benefit statements
• Other Services

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III. Comparison between the MPF Services of HSBC
and Manulife

• Compare these additional services of the Manulife
  and HSBC in the following aspects
• Manulife provides a wider range services
• electronic services

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IV. Comments on MPF services

• The ultimate goal
• ensuring people are adequately provided for upon
  reaching retirement age.

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IV. Comments on MPF services

• the choice of the MPF provider
• Chose by employer
• employee can only make the changes in the
  investment portfolio

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IV. Comments on MPF services

• MPF Scheme Authority
• consider what purpose they want to be in the MPF
  Scheme

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THE END
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