MPF attracts strong support despite falling below $1tr

17th October 2022

Inflow data suggests members expect further interest rate hikes

MPF Ratings’ September quarter MPF Asset Class Fund Flows Summary has now been uploaded.

Key points are as follows:

As previously reported, MPF’s accumulated 2022 YTD loss is approximately -21.48% while total assets have fallen below the $1tr level to approximately $965bn.
The average account balance for MPF’s 4.57m members is now approximately $211,000 per member (down -$46,700 (-18.1%) since the beginning of 2022).
Q3 saw the MPF system attract approximately $13.08bn in net inflows (See Table 1), taking 2022 YTD net inflows to more than $42bn which is approximately 9.1% higher than for the first 9 months of the past three years.
Despite being MPF’s worst performing asset class, HK & China equities continue to be well supported, attracting the largest share of inflows in Q3 and YTD (Also see Table 1).
MPF members are seeking shelter from falling markets by diversifying (reflected by support for the MPFA mandated DIS strategies) and switching to Money Market funds but notably, if fund flows are an indicator, MPF members expect further interest rate rises with Bond Funds seeing MPF’s highest outflows this year (Also see Table 1).

Francis Chung (叢川普), Chairman of MPF Ratings Ltd, Hong Kong’s independent Mandatory Provident Fund (MPF) research specialist today released its September quarter MPF Asset Class Fund Flows Summary by pointing to data suggesting MPF members are anticipating further interest rate rises.

Quotes:

Despite MPF’s total size falling below $1tr, MPF continues to attract strong support

“Despite MPF falling below $1tr, MPF continues to attract strong support. Factoring in September quarter’s estimated $13.08bn in net inflows, total net inflows for 2022 now exceed $42bn which is approximately 9.1% higher than for the first 9 months of past three years.”

MPF members anticipate further interest rate rises

“Bond funds have seen MPF’s highest outflows in 2022. As interest rates rise the capital value of bonds fall. Ongoing bond fund outflows in the September quarter suggests MPF members are anticipating further interest rate rises.”

Strong inflows reflect member confidence in the MPF system

“Despite strong inflows in 2022, MPF total assets have fallen below $1tr for the first time since July 2020. The decline in assets is a function of market returns, something the MPF system does not control. Strong inflows are however a good indication of confidence in the MPF system as a robust retirement savings platform.”

Table 1: MPF Asset Class Net Fund Inflows as at 30 September 2022