MPFA taking proactive steps as MPF records 2nd biggest annual loss

5th January 2023

New initiatives set to shine a light on underperforming schemes in 2023

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

Key points are as follows:

  • December falls in US and Global equities take MPF’s 2022 full year loss to approximately -$186.9bn or approximately -15.66%. Surpassed only by 2008’s full year loss of -30.2%.
  • After factoring in contributions, 2022 average MPF member account balances are approximately $229,500, an annual decline of -$28,200.
  • Total MPF assets end 2022 at approximately $1.049tr, down -11.20% for the year.
  • Under reported 2022 initiatives show MPFA willing to take proactive action when required.
  • MPFA’s “Initiative to Enhance Transparency of Governance Reporting of MPF Schemes” leaves underperforming MPF schemes with little room to hide.

Leading independent provider of MPF research, views and opinions, MPF Ratings Ltd, today announced its analysis of MPF’s full year 2022 investment results.

An annual investment loss of -$186.9bn (-15.66%) cushioned by MPF contributions sees MPF’s total assets end 2022 at $1.049tr, or an average member account size per MPF’s 4.57m members of $229,500; down -10.95% over the year.

When releasing MPF Ratings’ analysis, Francis Chung (叢川普), MPF Ratings’ Chairman acknowledged that MPF members will be disappointed by 2022 performance, and while the system does not directly control market returns, he remarked that system stakeholders can still ensure positive member experiences, and that several materially important, but under reported, 2022 MPFA initiatives reflect a willingness by the regulator to take proactive action when required.

Notably, MPF Ratings highlighted one circular issued to MPF trustees in August 2022, titled “Initiative to Enhance Transparency of Governance Reporting of MPF Schemes”, as one which has the potential to materially improve the MPF marketplace for members.

Quotes:

2022 was a difficult investment year

“2022 was a difficult investment year. Lingering pandemic worries were met with war, inflation, interest rate and growth concerns. The combination led to a de-rating of equities and bonds rendering traditional bond and equity diversification ineffective. With all MPF asset classes (except MPF’s Conservative Fund) producing varying negative return levels the best that members could do was to minimize losses.”

Member account balances – A savings safety net

“While members may be disappointed with 2022 results MPF average account balances are still a sizeable $229,500.  From a standing start of zero, MPF has grown into a meaningful retirement savings safety net. A savings safety net members would otherwise not have had.”

The MPFA’s “Initiative to Enhance Transparency of Governance Reporting of MPF Schemes” set to put underperforming MPF schemes under a spotlight with nowhere to hide

“The initiative demands MPF trustees publicly justify their MPF scheme’s “value for money” level. A materially important and positive directive putting underperforming schemes firmly under a spotlight with nowhere to hide. Such unprecedented transparency from the MPFA is applauded and will benefit MPF members throughout their MPF journey.”

Table 1: MPF Ratings’ MPFR Index returns by asset class (as at 31st December 2022)

Source: MPF Ratings

Table 2: 10 best performing MPF constituent funds for the month of December 2022

Source: MPF Ratings

Table 3: 10 best performing MPF constituent funds for December Quarter 2022

Source: MPF Ratings

Table 4: 10 best performing MPF constituent funds for the year of 2022

Source: MPF Ratings

Table 5: 10 worst performing MPF constituent funds for the month of December 2022

Source: MPF Ratings

Table 6: 10 worst performing MPF constituent funds for December Quarter 2022

Source: MPF Ratings

Table 7: 10 worst performing MPF constituent funds for the year of 2022

Source: MPF Ratings

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