No choice is a good choice

4th May 2023

April sees MPF’s DIS shine as equity returns de-couple

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

Key points are as follows:

MPF returns fell marginally in April. Average investment loss was -0.70% (as measured by the MPFR All Fund Performance Index) to reduce MPF’s year-to-date investment gain to 3.33%.
On an absolute basis, April’s investment loss is -$7.73bn or -$1,600 per MPF’s 4.69m members reducing year-to-date investment gains to $7,400 per member.
Factoring in contributions, total MPF assets ended April 2023 at approximately $1.105tr, or an average account balance of $235,500 (down a modest -$800 from the previous month but up $11,500 year-to-date) per MPF’s 4.69m members.
April saw a de-coupling of equity market returns. With a decline of -3.86% (as measured by the MPFR Equity Fund (HK & China) Index) HK/China equities was the worst performing MPF asset class while European, Global and US equities performed best.

Francis Chung (叢川普), Chairman of MPF Ratings Ltd, Hong Kong’s independent provider of MPF research, views and education highlighted April’s de-coupling of equity markets to emphasize the importance of diversification and reinforce the benefits of the MPFA’s mandated Default Investment Strategy (DIS) funds as he released MPF Ratings’ April MPF performance survey.

Taking into consideration market returns and after factoring in contributions, MPF ended April at approximately $1.105tr in size, or the average equivalent of $235,500 per MPF’s 4.69m members as HK/China equities produced the worst performance for the month while European, Global and US Equities recorded the best. Taking into consideration market returns and after factoring in contributions, MPF ended April at approximately $1.105tr in size, or the average equivalent of $235,500 per MPF’s 4.69m members as HK/China equities produced the worst performance for the month while European, Global and US Equities recorded the best.

Quotes:

MPF maintains its positive start to the year

“After producing negative performance for two consecutive years MPF members will be pleased to know that, notwithstanding losses in HK/China equities, MPF has maintained its positive start to 2023.”

Equity market de-coupling highlights the importance of diversification

“April’s de-coupling of US and European, and local equity performance highlights the importance of diversification. While equity markets globally can be highly correlated this is not always the case and knowing when it may occur, especially in the short term, is difficult to predict. It serves to remind MPF members to diversify and invest for the long term.”

No choice is a good choice in April

“MPF members who have not specified a fund choice are automatically invested in the MPFA’s mandated Default Investment Strategy (DIS) funds. With its relatively higher exposure to non-local equities, DIS’ Core Accumulation Fund was amongst April’s best performing. Every MPF scheme offers Default Investment Strategy (DIS) funds. They’re low fee ready-made diversified fund options and an excellent long term option for MPF members to consider.”

Table 1: MPF Ratings’ MPFR Index returns by asset class (as at 30th April 2023)