Will Canadian insurance giants’ dominance shake up Hong Kong’s MPF market?

18th October 2021

Leading MPF commentator also warns MPF members over obsession with equities

MPF Ratings’ September MPF Asset Class Fund Flows Summary has now been uploaded to MPF Ratings’ media education portal.

Key points are as follows:

  • MPF net inflows of $3.57bn (contributing to $10.47bn in net inflows for Q3 2021, and $34.65bn YTD) MPF’s total asset size declined $34.11bn (or -2.84%) from August and $54.66bn (or -4.48%) from quarter two 2021to end of September at $1.167tr (See Table 1).
  • Average individual MPF account balance is currently $257,000 per 4.5m member, falling $7,500 from August and $12,000 from last quarter.
  • Biggest asset class inflows winners: HK & China Equity Funds, Global Equity Funds and US Equity Funds received Q3 2021’s highest levels of net inflows, attracting 164.1% of MPF’s net inflows as members continued to abandon Money Market Funds (Also see table 1).
  • Most popular MPF provider: Manulife and Sun Life monopolized September quarter MPF inflows. With a combined market share of 37.2% the Canadian insurance giants attracted 196.2% of MPF’s total net inflows in the September quarter while no other sponsor received double digit inflows and 8 sponsors saw negative quarterly flows (See Table 2).
  • Most popular funds: Consistent with the popularity of equity asset classes the September quarter top 10 fund inflow winners were all equity funds (See Table 4).

Francis Chung (叢川普), Chairman of MPF Ratings Ltd, Hong Kong’s independent Mandatory Provident Fund (MPF) research specialist today released  MPF Ratings’ September MPF Asset Class Fund Flows Summary by highlighting the growing MPF industry dominance of Canadian insurers, Manulife and Sun Life, and the ongoing MPF member appetite for equity funds despite growing local and global uncertainties.

Manulife and Sun Life dominance

“With a strong distribution network, the dominance of Manulife and Sun Life in Hong Kong’s MPF market is not necessarily a surprise, but the relentlessness of their growing dominance is surprising. With a combined market share of 37.2% the Canadian insurance giants attracted 196.2% of MPF’s total net inflows in a September quarter which saw almost half the MPF scheme sponsors record net outflows and no other attracted double digit percentage inflows.”

MPF member appetite for equity funds despite growing local and global uncertainties

“Hong Kong and China, Global, and US equity funds attracted 164.1% of MPF’s net inflows in the 3rd quarter.  A staggering level of equity interest when one considers the current concerns over global inflation, rising interest rates, slowing Mainland growth and the longer term impacts of the pandemic. Additionally, to see retirement monies flow from Money Market funds and Mixed Asset funds into equities suggests that members are taking on higher levels of portfolio risks and ignoring the longer term benefits of diversification.  It’s a risky strategy that could see a significant destruction of retirement wealth if it fails.”

Table 1:  MPF Asset Class Fund Flows as of 30 September 2021

Source: MPF Ratings

Table 2:  MPF Scheme Sponsor Fund Flows as of 30 September 2021

Source: MPF Ratings

Table 3: Top 10 MPF Constituent Fund Inflow Winners for September 2021

Source: MPF Ratings

Table 4: Top 10 MPF Constituent Fund Inflow Winners for Q3 2021

Source: MPF Ratings

Table 5: Top 10 MPF Constituent Fund Inflow Winners for Year-to-Date 2021 (as of 30 September 2021)

Source: MPF Ratings

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