The Mandatory Provident Fund (MPF) Index Series was launched in 2001 by FTSE Russell in collaboration with Willis Towers Watson (WTW) and Hong Kong Investment Funds Association (HKIFA). The MPF Index Series is based on the FTSE All-World Index Series and provides a range of country and regional indexes currency hedged back into Hong Kong dollars for use by market participants in Hong Kong. The total return indexes within the series are calculated net of withholding tax rates applicable to MPF funds.
The methodology for the MPF Index Series is kept in line with market participants' changing requirements through a market consultation process carried out every three years by FTSE Russell in conjunction with WTW and HKIFA. Market consultations are designed to ensure the indexes provide precise benchmarks for the market by accurately reflecting regulatory requirements, permitted investment markets and asset classes, as well as taking into consideration the specific regulatory requirements under the MPF system. Index enhancements resulting from previous consultations can be downloaded from Index Resources below.
The latest consultation was completed in December 2019. The next consultation is scheduled for end 2022.
The FTSE MPF World Government Bond Index is designed to comply with the regulatory requirements governing investments in debt securities by Hong Kong Mandatory Provident Fund schemes. The index is based on the FTSE World Government Bond Index (WGBI) which measures the performance of fixed-rate, local currency, investment-grade sovereign bonds. The WGBI is a widely used benchmark that currently comprises sovereign debt from over 20 countries, denominated in a variety of currencies, and has more than 30 years of history available.
The FTSE MPF World Government Bond Index incorporates additional criteria as stipulated by the Mandatory Provident Fund Schemes (General) Regulation and Guidelines on Debt Securities. FTSE Russell worked closely with the Hong Kong Investment Funds Association (HKIFA) and Willis Towers Watson to ensure that the index appropriately reflects Hong Kong Mandatory Provident Fund Schemes Authority (MPFA) rules.
Further information about FTSE MPF WGBI can be found here.
The FTSE MPF Reference Portfolios (RPs) are used for performance measurement and reporting purposes as set out in paragraph D2.3 of the MPFA Code on Disclosure for MPF Investment Funds. In January 2019 the Mandatory Provident Fund Schemes Authority (MPFA) recognized the revised RPs in the Joint Submission made by the Hong Kong Investment Funds Association (HKIFA) and the Hong Kong Trustees' Association (HKTA). The Joint Submission includes implementation of the revised RPs where FTSE Russell replaces Willis Towers Watson as the RP administrator effective from 1 April 2019.
The RPs are designed to measure cross-asset market returns for portfolios with a global market and multi-asset exposure. The RPs are constructed as an index-level composite based on underlying equity and fixed income indexes calculated and maintained by FTSE Russell. The RPs also include a cash component. Further details can be found in the RPs Ground Rules.