MPF system takes hit as pandemic uncertainty continues

14th January 2022

MPF experiences multi-year net inflows decline

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

Key points are as follows:

MPF is forecasted to record annual net inflows of $46.87bn for 2021 (See Table 1), its lowest annual net inflows in 3 years (See Chart 1).
Despite declining net-inflows MPF’s asset size ended 2021 at $1.182tr, up 3.74% from the beginning of the year, and equivalent to an account balance of $260,000 per 4.5m members.
The monthly average net inflows ($3.91bn) fell 9.91% in 2021.
HK & China, US and Global Equity Funds attracted the biggest inflows throughout the past year at the expense of defensive funds, notably MPF Conservative Funds which saw the largest net outflows in December (-11.9%) and YTD (-22.4%) (See Table 1).
Manulife and Sun Life dominated the MPF market in 2021 at both a scheme and constituent fund level, having 9 out of the top 10 most popular funds by inflow (See Table 3).

Francis Chung (叢川普), Chairman of MPF Ratings Ltd, Hong Kong’s independent Mandatory Provident Fund (MPF) research specialist today released MPF Ratings’ December MPF Asset Class Fund Flows Summary by highlighting the affects that the ongoing global uncertainty has had on the MPF system.

Quotes:

On MPF’s declining net inflows

“2021’s annual forecasted net inflows of $46.87bn is the lowest seen since the start of the global Covid pandemic.”

On the reasons for MPF’s ongoing net inflows decline

“MPF’s net inflows decline reflects the general impact COVID has had on Hong Kong. Businesses have had to reorganize meaning perhaps fewer employed workers, members eligible for early retirement may be doing so, and Hong Kong has also seen historically higher levels of permanent departures, all of which are headwinds to net inflows into the MPF system.”

On confidence in the MPF system

“The decline in net inflows reflects an extraordinary external landscape. The MPF system remains robust and is a highly secure and competitive retirement savings system which provides additional retirement savings for members over the long term.”

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