December highlights MPF’s contrasting fortunes

22nd December 2023

“Slow and steady” rewarded as a volatile year draws to a close

Key points are as follows:
  • With a modest December estimated gain of 0.81%, MPF is on track to end 2023 with an estimated annual gain of 2.12% (as measured by the MPFR All Fund Performance Index as at 19th of December) (See Table 1).
  • In absolute dollar terms, MPF’s December’s forecasted investment gain is equivalent to $9.0bn (or $1,900 per MPF’s 4.69m members), delivering an estimated year-to-date gain of $22.2bn.
  • After factoring in contributions, total MPF assets are presently forecasted to end 2023 at approximately $1.12tr (up $73.6bn for the year), equivalent to an average MPF account balance of $239,600 (up $15,700 for calendar year 2023).
  • The MPFA’s mandated low fee Default Investment Strategy Fund (Core Accumulation Fund) is on track to produce its 2nd best annual result since its inception in 2017.
  • HK & China Equity Funds will end 2023 as MPF’s worst performing asset class. A December estimated investment loss of -3.75% (as measured by the MPFR Equity Fund (HK & China) Index) puts it on track for an annual loss of -15.55% and to possibly surpass the widest recorded annual return difference between it and US equities which is 40.07%; recorded in 2021.

Francis Chung (叢川普), Chairman of MPF Ratings Ltd, Hong Kong’s independent provider of MPF research, views and education today contrasted a possible record performance difference between HK and China equities and US equities, and the performance strength of the MPFA’s low fee mandated Default Investment Strategy (DIS) funds as he provided insights to how MPF is likely to end 2023.

Mr Chung has foreshadowed a modestly positive December investment result of 0.81%, which will all but confirm a positive 2023 annual result of MPF’s 4.69 members. While a positive return in a challenging investment environment should be welcomed by MPF members, the magnitude of the ongoing underperformance of local equity markets remains a concern but one can mitigate by being well diversified, as evidenced by the strong ongoing performance of the MPFA’s mandated low fee Default Investment Strategy Fund (Core Accumulation Fund) which is expected to produce its 2nd best annual result since its 2017 inception.


MPF likely to finish 2023 positively as December consolidates November’s strong gains

“Despite 6 monthly losses in 2023, MPF members should be pleased to hear they are likely to see a positive full year result as December sees equity markets globally consolidated November’s strong investment gains.”

As local and US equity performance differences approach record levels, ‘slow and steady’ investors reap diversification’s reward

“Local and US equity performance continues to diverge with the US on track to not only outperform Hong Kong and China equities for a 4th year out of 5 but also to possibly surpass 2021’s 40.07% record outperformance. In contrast, DIS’s Core Accumulation Fund should record its 2nd best calendar year result. ‘Slow and steady’ MPF members are reaping diversification’s reward in 2023.”

Outlook for 2024. DIS worked well in 2023, but will it in 2024?

“MPF’s strong finish to 2023 has been driven by positive inflation readings and the foreshadowing of lower US interest rates. Fixed income and selective equities do well in such conditions but as the extreme US and local equity performance difference shows, timing and choosing markets is risky. MPF Ratings supports the MPFA’s long-term diversified investing messages. DIS worked well in 2023 and we’re confident it will continue to offer consistent long term value in 2024 and beyond.”

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

Source: MPF Ratings

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