8 October 2020
–14.22% year-to-date decline equates to a loss of around -$31,600 for MPF members
MPF’s biggest losers in 2020 are funds tracking the Hang Seng Index (HSI). That’s according to leading independent MPF research group MPF Ratings’ latest monthly MPF Performance Survey. While all other fund categories produced positive returns for the September quarter, the HSI Total Return Index declined -2.62% (see Table 1). The HSI Total Return Index is now down -14.22%, the worst year-to-date performance since the end of the Global Financial Crisis (GFC) in 2011 (See Chart 1), and equivalent to an estimated -$31,600 loss for MPF members investing in funds tracking the HSI.
Table 1: 3rd Quarter and Year-to-date performance of MPFR Indices and HSI Total Return Index as at 30 September 2020
Source: MPF Ratings
Chart 1: Worst year-to-date performance of HSI Total Return Index since the end of the GFC
Source: MPF Ratings
When asked to put into context the HSI’s year-to-date performance, MPF Ratings’ Chairman, Francis Chung (叢川普) offered the following, “Single market investing ignores the very basic investment principle of diversification. MPF members have no control over investment returns but by diversifying they can control risk to produce more consistent returns. As a result of the HSI’s difficult year funds in MPF’s most popular Mixed Asset fund category (Mixed Asset 61-80), which has around 30% of assets in cash and bonds, have produced almost identical performance to the HSI since the end of the GFC but with much less risk (See Chart 2).”
Chart 2: Cumulative performance of HSI Total Return Index vs Mixed Asset Fund (61-80% Equity) over the past 10 years
Source: MPF Ratings
As an advocate for better retirement outcomes Mr Chung also pointedly gave his thoughts on how members can improve their chances of achieving retirement goals. “Time and diversification are MPF members’ best investment friends. Time in market, not market timing, is critical to long term wealth creation, so too is not having all eggs in one basket. It takes patience and courage to do nothing and remain diversified, and invested over the long term. If MPF members do this then the chances of them achieving their retirement goals will improve significantly, so too will their ability to sleep better at night.”
