12 March 2021
Year of the Ox has MPF members chasing bulls
MPF Ratings’ February MPF Asset Class Fund Flows Summary has now been uploaded to MPF Ratings’ media education portal.
Key points are as follows:
- MPF attracted $3.755bn in net inflows in February to reach an all-time high asset size of HK$1.173tr (See Table 1).
- MPF member confidence in local and regional equities remains very high. Hong Kong/China equities and Asian equities attracted a combined 82.4% of February’s net-inflows (See table 1) on top of the 104.3% of January’s net-inflows.
- 8 out of the top 10 fund inflow winners for February were HK/China or Asian equity funds (See Table 2).
- 3 out of 4 Mixed Asset Fund categories saw negative fund flows in February (See Table 1) which combined with strong inflows into local and regional equities suggests members are ignoring diversification principles.
- Sun Life, Manulife and HSBC China equity funds, ranking 1, 2 and 3 respectively, attracted the biggest share of MPF fund level inflows in January (See Table 2).
Francis Chung (叢川普), Chairman of independent MPF specialist research group MPF Ratings, said that the strong demand for HK/China and Asian equities raises concerns that members are chasing shorter term performance. “The vaccine rollout, stimulus packages and extended low interest rates create a positive environment for equities, but as we have seen with market sensitivity to inflation fears, over-valued share markets can quickly turn negative”
After identifying a shift from diversified funds to equities, Mr Chung also offered the following words of caution. “Of concern to MPF Ratings is the outflows seen in 3 out of the 4 Mixed Asset Fund categories. Mixed assets provide diversification benefits. To see strong inflows into equities at the expense of Mixed Asset Funds may suggest that MPF members, in an effort to chase short term returns, are ignoring diversification principles. For members those members, I have one comment, when the bulls stop running, don’t get caught in the stampede.”
Table 1: MPF Assets and 1-month MPF Fund Flows as at 28 February 2021 (by Fund Types)
Source: MPF Ratings
Table 2: Top 10 net inflow winners in the month of February 2021
Source: MPF Ratings