18th April 2024
Largest quarterly shift ever concerns leading MPF commentator
MPF Ratings’ Q1 2024 MPF Asset Class Fund Flows Summary has now been uploaded.
Key points are as follows:
- Q1 is historically a strong inflow quarter for the MPF system as members make additional MPF contributions to capitalize on tax deduction opportunities through Tax Deductible Voluntary Contributions (TVC).
- MPF recorded an estimated $13.88bn in net inflows in Q1 2024 (See Table 1), approximately 6.8% higher than the historical quarterly average of $13.0bn since TVC’s launch.
- Despite only having 8.4% of MPF’s market share, US Equities attracted an unprecedented record MPF Q1 net inflow of $9.16bn, over 4x its 5 year historical quarterly average ($2.13bn).
- At a sponsor level, Manulife ranked first attracting $4.83bn, or just under 35% in net inflows (See Table 2) while the Sun Life MPF US Equity Fund topped the fund net inflow table attracting $1.90bn (See Table 3).
- MPF returned an estimated 2.47% in Q1 and ended March with total assets of approximately $1.18tr (up $42.4bn for the quarter), equivalent to an average MPF account balance of $248,900 (up $8,900 for the quarter).
Francis Chung (叢川普), Chairman of MPF Ratings Ltd, Hong Kong’s independent Mandatory Provident Fund (MPF) research specialist today released his organization’s Q1 2024 MPF Asset Class Fund Flow Summary by highlighting that US equities received over $9bn of MPF’s net inflows in Q1 2024, by far the largest quarterly MPF net inflows into US equities ever recorded, and a concerning trend which Mr Chung attributes to a confluence of new fund launches, disappointing local equity results and MPF members trying to capitalize on the strong momentum of the US market.
All time record US equities inflows raises questions
“$9.2bn in only 3 months is by far the most ever invested in US equities by MPF members and raises the question if this phenomena occurred for the right investment reasons?”
Why has so much MPF money been invested in US equities in the first quarter of 2024?
“A combination of several new US fund launches, strong recent US equity performance and ongoing disappointing local equity results appear to have tempted MPF members.”
Timing and magnitude of the current inflows into US equities raises concerns
“The timing and magnitude of the US equity inflows raises concerns. MPF members should be focused on long term diversified investing not chasing short term returns in a very concentrated market. Last year 7 companies accounted for around 25% of the US equity market’s total returns.”
MPF Ratings reiterates its preferred 2024 investment approach
“Concentrated investments in single markets or asset classes increase risks in portfolios. MPF Ratings continues to emphasise diversification and long term wealth creation. It is for this reason the MPFA’s mandated low fee and well diversified DIS funds continue to be MPF Ratings’ preferred investment vehicles.”
Table 1: Q1 2024 MPF Asset Class Net Inflows
Source: MPF Ratings
Table 2: Q1 2024 MPF Scheme Sponsor Net Inflows
Source: MPF Ratings
^ AMTD Group, the scheme sponsor of AMTD MPF Scheme, has been renamed as Orientiert Group
Table 3: Q1 2024 Highest MPF Constituent Fund Net Inflows
Source: MPF Ratings
