The Government plans to take a small portion of the Future Fund for more diversified investments to enhance returns, Financial Secretary Paul Chan said today. 

Answering lawmakers’ questions on his 2019-20 Budget, Mr Chan said the Government has more than $200 billion in the fund currently managed by the Monetary Authority, with half of the money being invested in the long-term growth portfolio and the other half in the investment portfolio. 

As the money will not be needed for a long time, the authority has pooled it into a long-term investment with higher returns but lower liquidity, and it is not easy to liquidate the money. 

Mr Chan said sometimes it is also not easy to identify suitable investment projects when the authority invests the money this way, so the Government plans to optimise the fund by taking a small portion of it for more diversified investments. 

He noted that Victor Fung, Prof Lawrence Lau, Norman Chan and Peter Wong, who he described as experienced people in the financial services sector, have been invited to advise him on the fund’s investment strategies and portfolios. 

Apart from enhancing returns, the new plan can help consolidate Hong Kong’s status as a financial, commercial and innovation centre, Mr Chan added. 

The Financial Secretary said in choosing the investment items, the Government will consider the risk level as well as how the items are related to Hong Kong’s advantages, besides the commercial factors. 

The Future Fund was established in 2016 as an integral part of the fiscal reserves, for placement in longer-term investments to secure a higher return. 

It achieved a composite rate of return of 4.5% and 9.6% respectively in its first two years of operation.