Learn more about fund types

AIA provides diverse fund choices for customers. The full range of funds available allow customers to find the most suitable type of fund. Read more our fund choices and other basic retirement knowledge below.

Guaranteed Funds

A guaranteed fund provides certain form of guarantee to investors, usually on the capital invested or on a minimum rate of return, and thus, offers greater security against market fluctuations. Guaranteed funds have the following features:
 
  • Conditional: Generally, a minimum investment period and/or withdrawal restrictions apply for guarantee to be effective.
  • Charges are usually higher: Besides basic charges, the guarantor usually imposes an additional guarantee fee or reserve charge.
  • Lower long-term returns: The long-term returns of guaranteed funds may not outperform the market, and can fall behind the inflation rate. If members invest in low-return guaranteed funds over the long run, they may sacrifice the chance to secure better returns, which will be exacerbated by compounding effect.

Equity Funds

An equity fund seeks a higher rate of return through capital appreciation of stocks, traded mainly on approved stock exchanges. The features of equity funds are as follows:
 
The risks of an equity fund are generally higher than those of other types of funds. Returns may be affected by factors such as the volatility of stock markets and fluctuations in exchange rates. If the fund invests in stocks denominated in a foreign currency, the depreciation of that foreign currency may also lead to a drop in the price of the fund
 
  • Higher potential returns and risks: With more aggressive investment targets and better potential returns, the risks of an equity fund are generally higher than those of other types of funds. Major risks include the volatility of stock markets and fluctuations in exchange rates.
  • Diverse choices: Equity funds are frequently described in terms of geographical allocation: those investing in a single market (e.g. Hong Kong Equity Fund), regional markets (e.g. European Fund) or global markets, offering members greater diversity of choices.
  • Making use of dollar-cost averaging: The longer the investment period, the more effective “dollar-cost averaging” will average out the market fluctuations. This is particularly useful in counteracting the effects of short-term market volatility.

Bond Fund

A bond fund generally invests its assets in bonds or debt instruments issued by governments, public organisations, banks and commercial organisations. Returns are generated by recurrent interest earned from the underlying bonds, profit earned from trading the bonds in the market, and exchange rate hikes in the case of foreign currency bonds. While bond funds are generally considered a lower-risk investment than equity funds, members should take note of the following risks:
 
  • Interest rate risks: When interest rates rise or fall, bond prices may fluctuate, resulting in a drop in the fund price. Members should take the interest rate risk into account before investment.
  • Exchange rate risks: If the fund invests in bonds denominated in a foreign currency, the depreciation of that foreign currency vis-à-vis the Hong Kong dollar may lead to a drop in the price of the fund (which is denominated in Hong Kong dollar).
  • Credit rating risks:If the fund invests in a bond whose credit rating is downgraded, it may result in a drop in the price of the fund.

Mixed-Assets Fund

A mixed-assets fund invests primarily in a mix of bonds and equities, combining the strengths and weaknesses of both, achieving a balance of returns and risk. When investing in a mixed-asset fund, members should pay attention to:
 
  • Potential risks: Major risks include stock market fluctuations, changes in interest rates and currency exchange rates, and credit rating of bonds. Risk level is normally medium to high, though subject to the equity-bond ratio of individual funds.
  • Leveraging the equity-bond ratio: The higher the ratio of a fund's equity assets, the higher the risks, though such risk can be averaged over longer periods. Selecting a mixed-assets fund with a higher equity ratio may yield better potential returns.