Q1 inflows top $15bn as MPF’s biggest players capitalize on tax incentivized contributions

20th April 2023

Leading MPF commentator reinforces Finance Secretary’s consideration to increase tax deductions for Voluntary Contributions

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

Key points are as follows:

MPF records an estimated $15.265bn in quarterly net fund inflows (See Table 1), approximately 17.6% higher than the historical average of $12.980bn since TVC’s launch.
MPF members heed advise to diversify. Default Investment Strategy (DIS) funds were the biggest inflow winners. Despite only having 6.1% of MPF’s asset share, DIS Core Accumulation Fund attracted an estimated 14.5% of net inflows (Also see Table 1).
Manulife, Sun Life and HSBC are the biggest winners. MPF’s big 3 collectively attracted an estimated 58% of Q1 2023 net inflows (See Table 2).
Despite record net inflows, MPF’s total assets rose to $1.109tr at the end of Q1 2023, an increase of 5.51% compared with end of December 2022.
Factoring in MPF contributions and market movements, average account balances per 4.69m members increased $12,300 for first quarter of 2023 to $236,300.

Francis Chung (叢川普), Chairman of MPF Ratings Ltd, Hong Kong’s independent Mandatory Provident Fund (MPF) research specialist today released MPF Ratings’ March MPF Asset Class Fund Flows Summary by encouraging further incentives to encourage saving for retirement.

Quotes:

MPF’s biggest winners

“The first quarter of the calendar year is arguably the most important for MPF schemes. It set them up for a strong year and also captures the majority of the year’s TVC contributions. Manulife, Sun Life and HSBC dominated, attracting almost 60% of MPF’s first quarter inflows.”

The reason for MPF’s strong net inflows

“Tax incentives are a key driver for strong MPF inflows. Since the introduction of Tax Deductible Voluntary Contributions (TVC), the March quarter has seen net inflows approximately 20% higher than the historical average since TVC’s launch.”

Leading independent MPF commentator supports Finance Secretary’s consideration to increase tax deductions for employers made MPF Voluntary Contributions and for other additional incentives to encourage long term self-funded retirement

“The success of TVC shows incentives to promote saving for retirement works. In the 2023-34 budget speech, the Finance Secretary proposed increasing tax deductions for MPF Voluntary Contributions made by employers for their employees aged 65 or above while the MPFA appears to be reviewing contribution levels. Both initiatives warrant consideration and should be applauded. TVC is proving that, with the right incentives, Hong Kong workers are prepared to accept their savings responsibility.”

Table 1: MPF Asset Class Fund Flows for Q1 2023