MPF breaks January records reinforcing diversity’s importance

3rd February 2023

‘Smart rabbits have three burrows’

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

Key points are as follows:

Led by HK/China equities, the MPF system generated a January return of 6.12% (as measured by the MPFR All Fund Performance Index), equivalent to $64.4bn, to start 2023 in positive fashion.
After contributions, MPF’s average member account balance for its 4.57m members increased by approximately 6.51%, or $15,000, in January to around $244,800.
Total MPF assets grew by $68.4bn in January to end the month at approximately $1.119tr.
HK/China equities recorded its first ever double digit January return. As measured by the MPFR Equity Fund (HK & China) Index, HK/China equities was up 10.83% in January.
Investment return of 6.12% is MPF’s best January start on record, however positive January returns historically haven’t been a strong guide for calendar year performance. Since inception, MPF has only registered 7 positive annual returns (out of 12 occasions) after a positive January.
Unpredictable outcomes are a timely reminder that ‘smart rabbits have three burrows’, reinforcing the MPFA’s ongoing efforts to promote diversification through DIS.

Francis Chung (叢川普), Chairman of MPF Ratings Ltd, Hong Kong’s leading independent provider of MPF research, views and education today issued their January MPF performance survey by remarking that MPF’s January 6.12% average investment return is the system’s strongest ever start to a calendar year. After factoring in contributions, MPF’s 4.57m members’ saw their average account balance increase by $15,000 to $244,800 as the system’s total assets grew by $68.4bn to $1.119tr.

Quotes:

Despite best ever start, January returns are historically weak annual performance indicators but they do highlight the importance of longer term investing

“The system has produced its best ever start to a calendar year, however historically January performance has not necessarily been a positive annual indicator. Since MPF began, the system has only registered 7 positive annual returns (out of a possible 12 occasions) after a positive January. Over three years this improves to 10 out of 12, highlighting the importance of longer-term investing.”

Record HK/China equities return is biggest contributor to January’s strong start

“HK/China equities recorded its strongest January result since MPF’s inception. Its 10.83% return was the biggest contributor to MPF’s strong 2023 start. Markets reacted positively to China’s re-opening and COVID-19 policy relaxation and with 22% of the MPF market share, HK/China equities is the system’s single most important asset class.”

“A smart rabbit has three burrows” – What should MPF member do?

“As the Year of the Rabbit commences it is only appropriate to remind MPF members that ‘a smart rabbit has three burrows’. MPF Ratings supports the MPFA’s efforts to promote better diversity and the Default Investment Strategy (DIS) funds offered by all MPF schemes. DIS funds are low fee, ready-made diversified fund options, and for most MPF members are a sensible long-term option to consider.”

Table 1: MPF Ratings’ MPFR Index returns by asset class (as at 31st January 2023)