Estimated -$27.8bn monthly loss would be MPF’s 5th in 2023

22nd September 2023

New “bell weather” for MPF investor sentiment emergers as US and local equity return dispersion continues to widen

Key points are as follows:

  • MPF is on track to record a 5th 1-month loss for 2023. As at 19th of September 2023, MPF’s investment loss was -1.25% (as measured by the MPFR All Fund Performance Index) translating to a quarter-to-date investment loss of -1.63%.
  • In absolute dollar terms September’s estimated investment loss is equivalent to -$27.8bn (or -$5,900 per MPF’s 4.69m members), its estimated quarterly loss is -$32.2bn (or -$6,900 per member), turning year-to-date investment gain to a loss of -$33m.
  • After factoring in contributions, total MPF assets are presently forecasted to end September 2023 at approximately $1.091tr (up $40.4bn since beginning of 2023), equivalent to an average MPF account balance of $232,500 (up $8,600 since beginning of 2023).
  • HK & China Equity Funds continue to lag. Not only is its year-to-date estimated loss of -7.60% (as measured by MPFR Equity Fund (HK & China) Index), the worst amongst all MPF asset classes. Year-to-date return dispersion of 23.2% compared to US equities is the 2nd widest first 9-month return dispersion since MPF’s launch.
  • Record return dispersion highlights the importance of diversification

Francis Chung (叢川普), Chairman of MPF Ratings Ltd, Hong Kong’s independent provider of MPF research, views and education today pointed out that MPF is on track for its 5th monthly loss of 2023, while the dispersion between US equities, and Hong Kong and China equity market performance is also at a near all time high. Mr Chung noted that return dispersion has become a “bell weather” for MPF investor sentiment with US equities, despite its relatively smaller market share, attracting a significant share of MPF’s net inflows in 2023 at the expense of Hong Kong and China equities.


September’s estimated loss is MPF’s 5th monthly loss in 2023

“September has MPF on track to record a loss. Should this occur not only it will be the system’s 5th monthly loss in 2023 but it may also erode the investment gain of the first 8 months of 2023.”

US equities, and Hong Kong and China return dispersion has become a “bell weather” for MPF investor sentiment

“As a result of strong US equity performance and poor Hong Kong and China share performance over the first 9 months of 2023, return dispersion between the asset classes is currently the 2nd widest on record. Such performance difference has also seen a significant amount of MPF funds move from local equities to US equities. Fund flows are a gauge of where MPF members feel are the best places to invest their money. Money movement between local and US equities has become an investment sentiment ‘bell-weather’ within the MPF system.”

DIS Core Accumulation Fund and consistent performance – “It will never be the best performer but it will also never be the worst”

“Return dispersion between US equities and local equities may reflect MPF members’ investing sentiment, however it also highlights the difficulties between choosing the ‘best’ performing asset class and the importance of diversification. MPF Ratings stands with the MPFA in encouraging members to focus on long term investing and diversification. The best vehicle to achieve this are the MPFA mandated Default Investment Strategy (DIS) funds. Offered by every MPF scheme, DIS funds are low fee ready-made diversified fund options.”

Table 1: MPF Ratings’ MPFR Index returns by asset class (as at 19th September 2023)

Source: MPF Ratings

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