28 April 2021
10th positive return month in 12 pushes MPF account balances to all-time highs
Key points are as follows:
- The MPF system is expected to produce an estimated investment gain of $28.90bn in April, an equivalent average gain of $6,482 per member, to reach an all-time record asset size of $1.20tr.
- Average MPF member account balances are forecasted to reach $268,717 by the end of April. Also an all-time record high.
- No asset class is expected to produce a negative return for the month of April with an average return of 2.33% for the month (see Table 1).
- With a forecasted return of 5.13% US equities is expected to be the best performing asset class for a 2nd consecutive month (also see Table 1).
- MPF is expected to produce its 10th positive return month in 12 months.
Francis Chung (叢川普), Chairman of Hong Kong’s specialist independent MPF research group, MPF Ratings, today announced that the group is forecasting MPF’s April returns will rebound solidly after declining in March and that the MPF system will exceed $1.2tr for the first time ever; 9 months after MPF reached the $1tr milestone. MPF Ratings is also forecasting that average per member MPF account balances will exceed $268,717 as members benefit from a system which has now produced not only 10months of positive returns over the past year but also 16positive months over the 2 years and 22positive months over 3 years, statistics which Mr Chung says reinforces the importance for MPF members remaining fully invested and well diversified over the long term rather than look to switch funds and time markets.
On the MPF system reaching the $1.2tr milestone
“While it took the MPF system two decades to reach $1tr, it’s taken only nine months to reach $1.2tr. While the sustainability of such an extraordinary growth trajectory is uncertain, what is certain is the compounding return benefits from a growing pool of assets will see MPF’s assets grow exponentially. Most importantly, a rapidly growing MPF savings pool is incredibly valuable and will go a long way to improving the lives of Hong Kong’s ageing population.”
On the importance of investing for the long term and diversification
“April’s forecasted average MPF return of 2.33% will not only see an estimated average per member investment gain of $6,482, and a forecasted all-time high average MPF member account balance of $268,717, but it will also see MPF produce its 10th positive monthly return over a year, 16th over two years and 22nd over 3 years. Over the long term markets produce more positive return months than negative months, so if members simply remain fully invested and well diversified, rather than switch funds and time markets, they will be far better off. It’s really that simple.”
Table 1: Forecasted average investment returns by MPF asset class for April 2021
Source: MPF Ratings