US equity downturn at odds with MPF members’ expectations

24th April 2024

Expected monthly MPF loss coincides with record US market inflows

Key points are as follows:

  • Led by US equities, the MPF system is on track to produce a negative April return that may erase year-to-date gains.
  • April’s current investment loss is approximately -2.85% (as measured by the MPFR All Fund Performance Index as at 19th of April). (See Table 1)
  • In absolute dollar terms, a -2.85% decline would be equivalent to an approximate investment loss of -$15.7bn (or -$3,300 loss per MPF’s 4.75m members).
  • Japanese and US equities are expected to be amongst MPF’s worst performing asset class in April (Also See Table 1), the timing of which is unfortunate as MPF members invested an unprecedented $9.2bn in US equities in Q1 2024.
  • After factoring in contributions, total MPF assets are presently forecasted to end April at approximately $1.17tr (down $11.7bn from end of March), equivalent to an average MPF account balance of $246,400 (down $2,500 from end of March).

Francis Chung (叢川普), Chairman of MPF Ratings Ltd, Hong Kong’s independent provider of MPF research, views and education today highlighted the risks to MPF members who treat MPF as a short term trading investment. April is expected to see a -2.85% decline in MPF returns led by falls in US equities just as an unprecedented record $9.2bn moved into the world’s largest stock market in anticipation of ongoing US equity strength.


Short term data may not offer meaningful value for long term investing but it does offer an opportunity to educate members

“While short term data may not offer meaningful value for long term investing, it does offers an education opportunity to reinforce the crucial messages of diversification and long term investing.”

That’s bad market timing

“In 2023, 25% of US equity returns came from the so-called ‘Magnificent 7’. Last week they combined to lose almost one trillion US dollars, the timing of which coincided with MPF members moving a record $9.2bn into US equities to start 2024. That’s bad market timing and shouldn’t happen if scheme members are focused on diversification and long term investing.”

Outlook for 2024

“The year started with a favourable inflation and interest rates narrative however inflation is stubborn and rate cuts may be delayed. Geo-political tensions are also making markets nervous, and with nervous markets comes volatility. While there’s temptation to chase markets, it is a fool’s strategy long term. Diversification and investing MPF contributions through the MPFA’s mandated low fee DIS funds continues to be MPF Ratings’ preferred 2024 investment approach.”

Table 1: MPF Ratings’ MPFR Index returns by asset class (as at 19th April 2024)

Source: MPF Ratings

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