Contributions set to save MPF system from first annual asset decline in 3 years

5th January 2022

Record local and US equity return differential impact MPF returns

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

Key points are as follows:

  • The MPF system is forecasted to report a 2021 1-year investment loss of -$4.24bn, an equivalent average annual investment loss of -$800 per member.
  • Investment loss will be the MPF system’s the first annual investment loss since 2018 and largely attributable to the poor performance of MPF’s largest asset class HK/China equities.
  • Estimated annual MPF net contributions totalling $46bn compensate for investment losses.
  • Despite the forecasted annual investment loss, total MPF asset size is expected to end 2021  3.6% higher than 12 months prior at $1.181tr ($260,000 average account balance per member) compared to $1.139tr a year ago.
  • was the worst performing asset class in December and over 1 year, reporting a 1-month return of -1.53% and a 1-year return of -14.16% respectively (See Table 1). The calendar year return differential of US Equity Funds vs HK & China Equity Funds was an all-time record high of 40.07% (See Chart 1).

When announcing MPF Ratings’ December MPF Performance Survey Francis Chung (叢川普), MPF Ratings’ Chairman, pointed out Hong Kong and China equities’ annual loss, and record relative underperformance to US equities, as the biggest drag on MPF’s 2021 asset growth.

Quote(s):

Hong Kong and China equity loss was the biggest drag on MPF asset growth in 2021

“The double digit Hong Kong and China equity losses which saw local equities underperform US equities by an all-time record margin of over 40% was the biggest drag on MPF asset growth in 2021.”

MPF net contributions and strong US and Global equities save MPF system from asset decline

“With 23% market share Hong Kong and China equities is the largest single MPF asset class and is usually the MPF system’s performance barometer, but not in 2021. Strong global equity performance and ongoing MPF net contributions should see the MPF system assets total $1.181tr to close out 2021 with greater assets than the previous year for a 3rd consecutive year. A growing MPF asset pool is positive for all MPF account holders.”

Table 1: 1-month and 1-year MPFR Index returns as of 31 December 2021

Source: MPF Ratings

Chart 1: Calendar year relative performance of HK & China Equity Funds vs US Equity Funds since MPF’s inception*

Source: MPF Ratings

* Relative performance > 0% if HK & China Equity Funds outperformed US Equity Funds. Relative performance < 0% if HK & China Equity Funds underperformed US Equity Funds

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

Source: MPF Ratings

Table 3: 10 best performing MPF constituent funds for the year of 2021

Source: MPF Ratings

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