Asset class produces worst MPF result in almost a decade

6th July 2021

Significant loss overshadows record MPF earnings

MPF Ratings’ June MPF Performance Survey has now been uploaded.

Key points are as follows:

MPF Ratings’ MPFR All Fund Performance Index gained 0.11% in June, 3.15% for the June quarter, and 4.47% for the first 6 months of 2021 (See Table 1), the 7th best first half return since MPF’s inception.
MPF system produced positive MPF investment gains for a 5th consecutive quarter. Investment gains are estimated to be $39.241bn for the June quarter, an equivalent average investment gain of $8,638 per member.
Total MPF assets reached an estimated $1.221tr, an end of month all-time record.
After factoring in MPF contributions, MPF average account balances are expected to reach $268,823 at 30^th June 2021, also an end of month all-time record.
US Equity Fund is amongst the best performer for the month of June, the June quarter and on a year-to-date basis (also see Table 1). The US Equity Fund of MASS MPF Scheme has produced the highest return for both June and the 2nd quarter (See Table 2 and Table 3).
Bonds produced their worst first half year loss in over 8 years as MPF Ratings’ MPFR Bond Fund Index recorded a quarterly loss of -2.36% (also see Table 1).

Francis Chung (叢川普), Chairman of Hong Kong’s specialist independent MPF research group, MPF Ratings noted when releasing MPF Ratings’ June MPF Performance Survey that bonds experienced their largest first half year calendar loss in 8 years while US equities outperformed local shares by almost 200% and these significant variations in performance reinforce the importance of diversification and invested for the long term.

On the record magnitude of bond losses and performance differential between US, and HK and China equities

“MPF average account balances are expected to reach approximately $270,000 when the MPFA officially report, this represents an increase of 24% since a year ago and is good news for Hong Kong’s 4.5m workers, what is however not good news is the fact bonds have recorded their biggest first half year calendar loss in 8 years, and that members fully invested in HK and Chinese equities have seen their results dwarfed by the strong returns from US and European equity markets.”

The importance of diversification

“The sharp loss in bonds and the performance differential of approximately 190% between the US, and HK and China equities shows how difficult it is to consistently time markets and choose investments. MPF members can, and need to, protect themselves from being on the wrong side of these trades by being well diversified and focused on long term investing.”

Table 1: 1-month, quarterly and half-yearly MPFR Index returns as at 30 June 2021