23rd November 2023
Recent change in MPF landscape results in rank reshuffle and reflects confidence in MPF system
Key points are as follows:
- MPF is on track to record its 2nd best monthly gain in 2023. As at 20th of November 2023, MPF’s investment gain was 4.41% (as measured by the MPFR All Fund Performance Index) translating to a year-to-date gain of 1.57% (See Table 1).
- In absolute dollar terms, November’s estimated investment gain is equivalent to $46.4bn (or $9,900 per MPF’s 4.69m members), returning MPF to a year-to-date gain $15.6bn.
- After factoring in contributions, total MPF assets are presently forecasted to end November 2023 at approximately $1.114tr (up $63.0bn since beginning of 2023), equivalent to an average MPF account balance of $237,300 (up $13,400 since beginning of 2023).
- Despite a positive rebound in local equities, HK & China Equity Funds continue to lag. Its year-to-date estimated loss of -9.05% (as measured by the MPFR Equity Fund (HK & China) Index) compared to a gain of 18.17% for US equities (as measured by the MPFR Equity Fund (US) Index) places it on track to underperform US equities for 4 out of 5 recent calendar years (See Table 1). Ongoing return dispersion between local and US equities highlights the importance of diversification.
- Pension services focused BCT’s acquisition of the Invesco Strategic MPF Scheme’s sponsorship on 1st of November has raised MPF’s competitive stakes, propelling the mid-tier BCT into a top 5 MPF market share place. The acquisition also highlights BCT’s confidence in the MPF system.
Francis Chung (叢川普), Chairman of MPF Ratings Ltd, Hong Kong’s independent provider of MPF research, views and education today highlighted MPF’s November performance rebound as he foreshadowed a positive performance end to 2023 with members eagerly anticipating full year MPF results. Following a difficult October where MPF returns fell to an estimated -2.72% year to date loss, a forecasted rebound of 4.41% in November places the MPF system in a good position to avoid a potential 3rd calendar year of annual losses.
Quotes:
November sees MPF performance rebound strongly
“After 6 monthly losses in 2023, MPF is on track to record a strong November investment gain which would erase the previous losses, and by doing so put the system in a position to end the year positively.”
While equity market returns have been strong in November, US equities continues to outperform Hong Kong and China equities MPF’s largest asset class
“While all equity classes have performed well in November, US equities continues to outperform Hong Kong and China equities. If this trend continues to the end of the year, it will be the 4th out of 5 recent calendar years that US equities outperforms local shares.”
US or HK & China equities? Which should I choose?
“MPF Ratings encourages members to focus on long term investing and diversification. The best vehicle to achieve this is the MPFA mandated Default Investment Strategy (DIS) funds. Offered by every MPF scheme, DIS funds have a relatively higher exposure to US equities than traditional mixed asset funds and are low fee ready-made diversified fund options.”
Table 1: MPF Ratings’ MPFR Index returns by asset class (as at 20th November 2023)
Source: MPF Ratings
