6th September 2023
Sustainable investing focused funds produce surprising results as markets scrutinize corporate governance
MPF Ratings’ August MPF Performance Survey has now been uploaded.
Key points are as follows:
- The MPF system produced an average August investment loss of -3.21% (as measured by the MPFR All Fund Performance Index), reducing year-to-date investment gains to approximately 2.67%.
- In absolute dollar terms August’s investment loss was -$36.8bn (or -$7,800 per MPF’s 4.69m members), trimming MPF’s total year-to-date absolute dollar gain to approximately $27.8bn, or the equivalent of $5,900 per member.
- After factoring in both August’s market investment losses and MPF contributions, end of August total MPF assets are at approximately $1.115tr (up $64.2bn since beginning of 2023), or an average MPF account balance of $237,600 (down -$7,000 for August but up $13,700 year-to-date).
- While equity markets globally were weak in August, Hong Kong and China equities were the worst. Concerns surrounding the broader effects of China’s property woes saw it produce an August loss of -7.89% (as measured by MPFR Equity Fund (HK & China) Index).
- Notably in a month where corporate governance was a key catalyst for market volatility, one fund (a HK equity ESG tracking fund) significantly underperformed, however, all other ESG funds (including Sun Life’s newly launched MPF Global Low Carbon Index Fund) all produced above median returns in the month of August.
Francis Chung (叢川普), Chairman of MPF Ratings Ltd, Hong Kong’s independent provider of MPF research, views and education today released MPF Ratings’ August MPF performance survey by highlighting the outperformance of MPF’s ESG funds in a month where the focus should have been on investment diversification and corporate governance, as China’s property woes significantly contributed to an August MPF investment loss of -$36.8bn. After factoring in both the market result and MPF contributions, MPF total assets ended August at $1.115tr or an average of $237,600 for each of MPF’s 4.69m members.
Quotes:·
MPF was on the cusp of eroding its entire 2023 gains in one month, but a strong last week of trading saw MPF reduce losses
“By mid-August concerns over China’s economic health and property woes put the MPF system on the cusp of eroding its entire 2023 gains however a strong final trading week saw losses trimmed to -3.21%. After factoring in contributions MPF now stands at $1.115tr in size, equivalent to an average MPF account balance of $237,600 for MPF’s 4.69m members while year-to-date investment gains stand at around 2.67%.”
Positive news in a difficult market investment environment
“Members appear to heeding the MPFA’s ongoing diversification message and sustainable investing messages. In a month where corporate governance was under the spotlight, with the exception of one local ESG equity fund, all ESG focused funds, including the newly launched Sun Life MPF Global Low Carbon Index Fund produced above median investment returns.”
MPF’s outlook for the rest of 2023
“Market commentators will continue to keenly observe China’s property concerns and the broader impairment impacts. Positively, the MPFA has worked earnestly to put good governance principles in place to protect MPF member interests. Such principles protect MPF’s members. They promote accountability that minimizes the prospects of MPF scheme trustee appointed fund managers having undue holdings in overly exposed companies.”
Table 1: MPF Ratings’ MPFR Index returns by asset class (as at 31st August 2023)
Source: MPF Ratings
Table 2: 10 best performing MPF constituent funds for the month of August 2023
Source: MPF Ratings
Table 3: 10 best performing MPF constituent funds for year-to-date of 2023
Source: MPF Ratings
Table 4: 10 worst performing MPF constituent funds for the month of August 2023
Source: MPF Ratings
Table 5: 10 worst performing MPF constituent funds for year-to-date of 2023
Source: MPF Ratings
