Positive returns have been seen in Capital Preservation Funds since the inception of the Mandatory Provident Fund System in December 2000.

The Mandatory Provident Fund Schemes Authority said today that since the introduction of the system, the fund has recorded an accumulative return of 3.9%.

The authority said as the fund is required to invest in either short-term bank deposits or high-quality bonds with an average investment period not exceeding 90 days, in practice, these bonds normally will hold until maturity, and scheme members will get principal and interest. In so doing, the capital is preserved.

As bonds are valued at market value, market fluctuation will affect the value of the fund.

The authority has been working with the industry to review the valuation methodology to reflect the actual practice, and to review the statutory investment restrictions on the fund.