Two steps forward one step back

6th March 2023

Despite giving up gains in February, MPF surprises market

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

Key points are as follows:

After its strongest January on record, the MPF system, led by HK/China equity declines, generated a February loss of -4.37% (as measured by the MPFR All Fund Performance Index), equivalent to -$49bn.
According to the MPFA’s latest Mandatory Pension Fund Schemes Statistical Digest, the MPF system added approximately 108,000 new members in 2022.
After contributions, MPF’s February average member account balance for its 4.69m members decreased by approximately -3.92%, or -$9,400, to around $229,400.
Total MPF assets fell by -$44bn in February to end the month at approximately $1.077tr.
Despite February’s losses, MPF’s aggregate year-to-date return remains positive at 1.49%.

Francis Chung (叢川普), Chairman of MPF Ratings Ltd, Hong Kong’s leading independent provider of MPF research, views and education today issued MPF Ratings’ February MPF performance survey by noting confidence in Hong Kong’s MPF system remains strong and resilient with a surprisingly significant number of new members joining the system in the past year. 108,000 new MPF members entered the system in 2022. Despite confidence in the system, ongoing inflationary and interest rate headwinds were key factors affecting February returns. After including contributions, MPF’s 4.69m members saw their average account balance decrease by -$9,400 to $229,400 as the system’s total assets fell by -$44bn to $1.077tr.

Quotes:

Ongoing economic headwinds continue to create market uncertainty

“After MPF’s record January it shouldn’t come as a surprise that markets gave up some returns in February, but members should continue to exercise caution as economic uncertainty remains a concern.”

Surprising growth in MPF member numbers reflects confidence in a robust and secure retirement system

“Security is essential in times of uncertainty. Surprisingly, MPF saw 108,000 new members added to the system in 2022. The increased number of members relying on MPF to afford them a comfortable retirement reflects confidence in a robust and secure retirement system.”

MPF Ratings reiterates support for the MPFA’s promotion of DIS funds

“If there’s a lesson from February’s retracing of January’s record investment returns it’s that predicting short term returns is difficult. MPF Ratings supports the MPFA’s efforts to promote better diversity and the low fee Default Investment Strategy (DIS) funds offered by all MPF schemes. They’re cost effective ready-made diversified fund options, and for most MPF members they’re a sensible long-term option to consider.”

Table 1: MPF Ratings’ MPFR Index returns by asset class (as at 28th February 2023)