One MPF scheme dominates October inflows as members turn cautious on local equities

15th November 2021

Relationship between two asset classes highlights ongoing concern

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

Key points are as follows:

MPF’s asset size stood at $1.195tr at end of October, rising $28.27bn (or 2.42%)from September (See Table 1).

MPF net inflows in October totalled $4.33bn, an increase of 21.2% from September (Also see Table 1).

Average MPF account balance grew $6,000 from September to an equivalent of $263,000 per 4.5m members in October.

Most popular funds: 7 out of the top 10Constituent Fund inflow winners were from one MPF Scheme, Manulife Global Select, attracting 52.2% of industry’s net inflows in October (See Table 3).

Asset class inflow winners and losers (Also see Table 1):

  • 2021’s least popular fund category, MPF Conservative Funds, was the 2nd largest asset class inflows winner in October, receiving 26.2% of the industry’s net inflows, conversely 2021’s most popular fund category, HK/China equities, received only 0.1% of net inflows; ranking it 12th in October (See Table 1).
  • US Equity Funds attracted the largest net inflows in October (30.2%), the 4th month reporting net inflows of greater than 30% in this calendar year (See Table 1).
  • Opposite fund flow relationship between HK/China equities and MPF Conservative Funds highlights “risk on/risk off” trading mentality of MPF members (See Graph 1).

Francis Chung (叢川普), Chairman of MPF Ratings Ltd, Hong Kong’s independent Mandatory Provident Fund (MPF) research specialist today released  MPF Ratings’ October MPF Asset Class Fund Flows Summary by highlighting the opposite fund flow relationship between MPF Conservative Funds and MPF’s largest asset class, Hong Kong/China equities as one MPF scheme dominates October MPF inflows.

On Manulife’s fund flow dominance in October

“Manulife’s MPF fund flow dominance in October demonstrates the growing importance of offering a variety of funds to members.  More than ever, members are able to choose their own MPF schemes. Broader and better fund choices and ease of investing contribute to a better member experience which enables attracting new, and retaining existing, MPF members.  Manulife appear to have found a good balance of number and types of fund choices.”

On the inverse relationship between MPF Conservative Funds and HK/China equities

“MPF Conservative Funds and Hong Kong/China equities are at opposite ends of investors’ risk appetite. Capital loss is possible in HK/China equities while money market investing Conservative Funds focus on capital preservation. The monthly inverse change in fund flows between the two asset classes (See Graph 1) suggests that rather than long term, risk appetite focused investing, some MPF members attempt to time markets.  It’s a risky strategy that could see a failure to achieve retirement objectives. We continue to urge members to focus on long term and diversified strategies.”

Table 1:  MPF Asset Class Fund Flows as of 31 October 2021

Source: MPF Ratings

Table 2:  MPF Scheme Sponsor Fund Flows as of 31 October 2021

Source: MPF Ratings

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

Source: MPF Ratings

Graph 1: Industry Share of 1-Month MPF Fund Flows of HK/China Equity Funds and MPF Conservative Funds

Source: MPF Ratings

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