Latest MPF performance data reveals an uncomfortable truth

3rd November 2021

Extreme performance difference to impact members despite MPF recording its best 2021 gain

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

Key points are as follows:

  • MPF Ratings’ MPFR All Fund Performance Index rose 1.76% in October (See Table 1), approximately 4 times the monthly average (0.39%) since MPF’s inception.
  • MPF is expected to deliver MPF members their 2021 highest monthly investment gain in October. Estimated to be approximately $23.9bn or an equivalent average investment gain of $5,300 per member in October.
  • Total MPF assets is expected to increase from $1.167tr as of 30 September to approximately $1.194tr as at end of October.
  • After factoring in forecasted gains and MPF contributions, MPF average account balances are expected to increase to approximately $262,900 as at end of October (from $256,800 as of 30 September).
  • Performance differential between US Equity Funds vs HK & China Equity Funds now widest since MPF’s inception. The calendar year-to-date outperformance of US equities relative to HK and China equities reached 29.23% in October (vs 24.43% in September).

Francis Chung (叢川普), Chairman of Hong Kong’s specialist independent MPF research group, MPF Ratings today released its October MPF Performance Survey by highlighting the record performance difference between US equities and HK/China equities and the cost impact this would on MPF members in the future. 

On MPF’s October performance

“After recording MPF’s first quarterly loss in 18 months doubtless MPF members were pleased to see a rebound in returns in the month of October. Hopefully the momentum we’ve seen in October will provide the foundation for a strong finish to 2021.”

Record performance differential between HK/China and US equities

“On a calendar year basis MPF’s US equity fund universe is now outperforming its HK/China counterpart by approximately 30%.  This difference is as extreme as it is unprecedented, and is the widest margin in MPF’s 21 years of existence.”

Impact and consequences of the performance differential

“The performance difference is both a real and opportunity cost which could materially cost MPF members over their working life, but to now try and chase markets through market timing is risky and ill advised. The performance difference serves to reinforce the importance of diversification. At the beginning of 2021 few would have predicted a record divergence in returns. The MPFA’s mandated DIS (Core Accumulation Fund) is MPF’s 4th best performing fund type in 2021.  No coincidence given it’s well diversified and allocates a reasonable portion of assets into US equities.”

Table 1: 1-month and year-to-date MPFR Index returns as of 31 October 2021

Source: MPF Ratings

Table 2: 10 best performing MPF constituent funds for the month of October 2021

Source: MPF Ratings

Table 3: 10 best performing MPF constituent funds for year-to-date of 2021

Source: MPF Ratings

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