So close yet so far for MPF…

5th June 2024

Second half pullback sees MPF miss all-time record but average balances now exceed $250,000

MPF Ratings’ May MPF Performance Survey has now been uploaded.

Key points are as follows:

As a result of a second half pullback in asset values MPF just missed breaching its June 2021 all-time record asset size of $1.22tr to end May at $1.21tr.
With a 4.72% return, US equities topped MPF’s May’s performance table, as the system generated a May gain of 2.08% (as measured by the MPFR All Fund Performance Index), its 3rd positive month in 2024, to increase its year-to-date gains to 4.36% (See Table 1), the best first 5 calendar months’ performance since 2021 and the 8th best first 5 calendar months’ performance since MPF’s launch.
In absolute dollar terms, MPF’s May investment gain added $24.7bn (or $5,200 per MPF’s 4.75m members) to the system. Year-to-date investment gains now total $50.4bn (or $10,600 per member).
After factoring in contributions, total MPF assets ended May at approximately $1.21tr (up $28.7bn from end of April and up $72.8bn year-to-date). MPF is now only $8.03bn (or 0.66%) below MPF’s all-time record total asset size.
Average MPF account balances per its 4.75m members is now $255,200 (up $6,000 from end of April and $15,300 for year-to-date).

Francis Chung (叢川普), Chairman of MPF Ratings Ltd, Hong Kong’s independent provider of MPF research, views and education today released MPF Ratings’ monthly performance survey by pointing out that while a second half pullback in May left the MPF system just short of its all-time record total asset size, average MPF account balances now exceed $250,000 for the first time since January 2022 as the system produced a positive monthly return, its 3rd in 2024.

Quotes:

Despite missing out on an all-time asset size record, MPF has much to cheer about

“Despite missing out on an all-time asset size record, MPF has much to cheer about. All asset class returns were positive in May, $50.4bn of investment gains have been added this year and average account balances above $250,000 for the first time since January 2022.”

Why an MPF average account balance of $250,000 is such a psychologically important level

“An average MPF account balance above $250,000 is a psychologically critical level. In our experience it’s a threshold where MPF members start believing they have a solid pillar to plan for retirement planning.”

Outlook for 2024 – While there are signs of improving sentiment, uncertainty to continue as elections are now in play

“While there are signs of improving sentiment following strong corporate results, we expect uncertainty to continue. Adding to stubborn inflation and ongoing geo-political tensions, major elections on both sides of the Atlantic are now looming. There is never investing certainty but uncertainty can be mitigated through a regular savings discipline, diversified investing and a focus on the long term.”

Table 1: MPF Ratings’ MPFR Index returns by asset class (as at 31st May 2024)