End of month sell off substantially reduces MPF member gains

3 February 2021

Investment gains declined over 60% in the final week of January

MPF Ratings’ January MPF Performance Survey has now been uploaded on our website.

Key points are as follows:

  • Despite the final week sell off, total MPF system earnings for January totalled HK$20.06bn, lifting MPF total assets to an estimated HK$1.16tr, a record end of month size.
  • Average month-to-date MPF fund return in January dropped from an intra-month forecasted peak of 3.82% (as at 22 January) to 1.20% (as at end of January).
  • Approximately $4,500 of investment gains were added to members’ average accounts in January, a decline of 62% from a forecasted expected investment gain of $11,900 (as at 22 January), as HK and China equity markets joined a sell-off in global markets in the final week of January.
  • Average MPF member account balances are now an estimated $260,000 which, despite the intra-month selloff, is still an end of month record MPF balance.
  • HK and China equity was the best performing asset class in January with a 1-month MPFR Equity Fund (HK & China) Index return of 5.52% (See table 2), with the best performing publicly available fund being BOCI-Prudential’s My Choice China Equity Fund (See table 1) followed by Asian equities with a 1-month MPFR Equity (Asia) Index return of 3.58% (See table 2).

When releasing MPF Ratings’ January MPF Performance Survey, Francis Chung, MPF Ratings’ Chairman stressed the need for MPF members to be vigilant in what continues to be a volatile investment environment, stating, “While MPF account earnings were once again positive in January, the final week market sell off saw estimated MPF earnings decline over 60%. As quickly as markets declined in the last week of January, markets have rebounded strongly in the first few days of February, but this type of volatility and the unprecedented collective retail investor short squeezing of US stocks such as GameStop and AMC exhibit bubble like behaviour.” When asked how MPF members can be vigilant, Mr Chung stressed the following, “Time in markets, not market timing is key. Additionally, while volatility remains high, positively MPF account balances are at record levels, so members should take this as an opportunity to speak to an investment professional and review one’s MPF account to ensure it is well diversified and focused on long term needs of the individual member.”

Table 1: Top 10 best performing publicly available MPF constituent funds for January 2021

Source: MPF Ratings

Table 2: 1-month returns of MPFR Indices as at 31 January 2021

Source: MPF Ratings

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