13 May 2021
US equities receives biggest MPF inflows before Dow Jones has worst day since January
MPF Ratings’ April MPF Asset Class Fund Flows Summary has now been uploaded to MPF Ratings’ media education portal.
Key points are as follows:
- MPF attracted $4.784bn in net inflows in April to reach an asset size of HK$1.198tr (See Table 1), the equivalent of $268,593 per member.
- Largest inflows: US Equities attracted 30.9% of MPF’s net inflows in April (See table 1).
- Largest outflows: Money Market Funds, Guaranteed Funds and Bond Fundsaccounted for -34.6% of April’s net flows (See table 1).
- Manulife and Sun Life were the biggest MPF scheme sponsor winners in April, attracting almost 70% of MPF’s net inflows (See Table 2).
- Manulife MPF North American Equity Fund attracts the largest share of inflows at a fund level, accounting for 11.8% of net inflows in April (See Table 3).
MPF Ratings Ltd, Hong Kong’s independent Mandatory Provident Fund (MPF) research specialist today released their April MPF Asset Class Fund Flows Summary with the highlight being the strong inflow into US equities in the month of April.
When releasing its April MPF fund flows report, MPF Ratings’ Chairman Francis Chung (叢川普) expressed genuine concern that the investment behaviour of MPF members was acting against their own best interests, pointing out that short term trading will magnify MPF losses in May. “Overnight the Dow Jones Index fell 681 points, its worst single trading day since January. US equity markets peaked in April just as an estimated 30.9% of MPF’s net inflows went there, that’s approximately 8x more than US equities’ MPF market share of 4%. Regrettably, MPF members appear to have overbought US shares at the top of the market in the hope the market will continue to rise. Such investment behaviour carries significant risks.”
When Mr Chung was asked if a change in investment approach is needed to produce better investment outcomes he was honest in his assessment. “Yes. The MPF system is often criticized for its failure to produce good returns, but performance is not a system issue. MPF members choose their own investments. As long as members aggressively try to time markets, and do so at the wrong time, they will not only produce disappointing returns, but they also expose themselves to losses. Blaming the system for the choices of MPF members ignores the issue which needs resolving, and that is that members need to understand it is diversification and “time in market” and not market timing which produces long term consistent returns.”
Table 1: MPF Assets ranked by 1-Month Fund Flows as at 30 April 2021 (by Fund Types)
Source: MPF Ratings
Table 2: MPF Assets ranked by 1-Month Fund Flows as at 30 April 2021 (by MPF Scheme Sponsor)
Source: MPF Ratings
Table 3: Top 10 Net Inflow Winners for April 2021
Source: MPF Ratings
