Have MPF returns bottomed?

5th May 2022

History says “yes” as eMPF and sustainable investing principles open up better return outcomes

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

  • MPF, as measured by the MPFR All Fund Performance Index, saw a -4.71% decline in April equivalent to monthly dollar loss of -$53.9bnand a 2022 accumulated loss of -$130.1bn or -10.54% (See Table 1).
  • Average MPF member account decline is approximately -$11,700 in April and -$28,400 YTD.
  • Total MPF assets at April’s end is approximately $1.071tr (approximate account balance of $233,500 per MPF member).
  • HK and China equities recorded its 10 monthly loss in the past year.
  • History suggests markets are near a bottom as MPF members are reminded that remaining invested and diversified rewards long term focused MPF members (See Chart 1).

Key points are as follows:

Hong Kong’s specialist independent MPF research group, MPF Ratings, released its April MPF Performance Survey by examining MPF’s past performance during times of existential market volatility. Francis Chung (叢川普), MPF Ratings’ Chairman, also took the opportunity to echo the MPFA’s diversification and long term investing message.

Quote(s):

History suggests we are at or near a market bottom

“MPF’s 2022 loss is -10.54%. Positively, previously when MPF experienced losses exceeding 10%, it has generally coincided with a market rebound with MPF values growing on a cumulative basis.” (See Chart 1).

When will MPF recover its 2022 losses?

“One cannot say with certainty when MPF will recover but what we can say with confidence is that over time MPF returns will not only recover but account balances will also grow. How long this will take is an open question that highlights the importance of being well diversified and long term invested. Time in market is a powerful friend to investors.”

MPF system is robust and the introduction of eMPF and the recently announced sustainable investing principles should open the system up to better fee adjusted return possibilities

“The MPF system is robust and MPF member assets are secure. The MPFA’s commitment to eMPF and the recently announced sustainable investment principles is, in our opinion, a gateway to greater efficiency, lower fees and an opportunity to introduce innovative products and services that potentially create better fee adjusted returns for members.”

What should MPF member do?

“Time in markets, not market timing, is the key to unlocking long term wealth creation. Falling markets can also offer good opportunities to invest in quality assets at lower prices. Members should remain invested and diversified to maximise the compounding effect that sees wealth grow exponentially over their working life.”

Table 1: 1-month and year-to-date MPFR Index returns as of 30 April 2022

Source: MPF Ratings

Chart 1: Cumulative Performance of MPFR All Fund Performance Index since MPF inception and after losses exceeding 10%

Source: MPF Ratings

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