MPF’s smaller schemes deliver better value

28 July 2020

As MPF members grow their accounts by a record $22,900

Size matters, but not in ways people expect. That’s the view of leading independent MPF commentator MPF Ratings as they released their quarterly MPF Earnings and Fees (E&F) report.

According to MPF Ratings’ latest E&F report, with the notable exception of Manulife’s Global Select (MPF) Scheme, smaller schemes surprisingly outperformed larger schemes as the MPF industry generated a June quarter median return per MPF Scheme of 9.9% and grew to a total asset size of $967.77bn (See Table 1).

Table 1: MPF Schemes ranked by Q2 2020 Net Returns as at 30 June 2020

Source: MPF Ratings

“On average each MPF member’s account grew $22,900, the highest quarterly improvement in the last 5 years, as markets rebounded in the second quarter, but there are inherent biases which MPF members need to be aware of.  MPF schemes with the greatest concentration of equity funds outperformed their more diversified counterparts.  This in part explains the relative outperformance of the smaller MPF schemes to larger ones,” noted Francis Chung (叢川普), Chairman of MPF Ratings, who also cautioned members against making reactive decisions. “The true value of an MPF Scheme is not short term performance or fees.  MPF is life-long. Service, diversified fund choices and innovation all contribute to a positive member experience. Arguably, larger schemes should have greater resources to support members, so while in the short term performance may fluctuate, in the long term, performance and value for money needs to be put in the context of not just fees charged, but also services provided.”

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