COVID’s impact on the MPF system

15th December 2021

MPF industry’s latest fund flow data shows MPF at a 3 year nadir

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

Key points are as follows:

– MPF’s monthly assets fell $28.57bn or -2.39% in November to end the month at $1.166tr in size (See Table 1), more than $54.9bn less than MPF’s record asset size of $1.221tr achieved in June.

– MPF’s November net funds inflows totalled $3.14bn taking YTD cumulative net inflows to $42.12bn placing the MPF system on track to achieve its lowest annual inflows in three years (See Chart 1).

– MPF asset class inflows winners and losers: (See Table 1)

HK＆ China, US and Global Equity Funds received November’s top 3 net inflows and are on track to be 2021’s largest inflow recipients.
MPF’s traditional “safe” asset classes Conservative Funds, Guaranteed Funds and Bond Funds continue to be ignored recording the largest net outflows in November and also YTD.

– Most popular MPF providers: Manulife and Sun Life continue to monopolize MPF’s inflows while HSBC see MPF’s largest outflows (See Table 2).

– Most popular MPF funds: Manulife Global Select’s MPF North American Equity Fund attracted approximately 1 out of every 5 MPF net contributions (21.3% net inflows) to be MPF”s most popular fund in November (See Table 3) while Sun Life’s Rainbow’s MPF Hong Kong Equity Fund is on track to be 2021’s most popular fund (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’ November MPF Asset Class Fund Flows Summary by highlighting an ongoing annual decline in MPF net inflows over the past three years.

Quotes:

On MPF’s declining net inflows

“The MPF system’s November net funds inflows totalled $3.14bn taking cumulative annual net inflows to $42.12bn, a solid number, but one which places MPF on track to achieve its lowest annual inflows in more than three years.”

On the reasons for MPF’s ongoing net inflow decline

“MPF net inflows have declined annually for the past three years, a COVID impacted period which has inextricably tied Hong Kong’s economic and social landscape together. Businesses have downsized, members have taken early retirement and the system has also seen a larger than historically recorded level of permanent departures, all of which are headwinds to the growth of the MPF system.”

On confidence of the MPF system

“The ongoing decline in net inflows speaks to an extraordinary external landscape and not the robustness of the MPF system. Despite ongoing declines in net inflows Hong Kong workers should be confident that the MPF system is a highly secure and competitive retirement savings system which will provide for them over the long term.”

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