MPF set to surpass asset record on the back of best half year start since 2019

25th June 2024

$62bn in earnings with possibly more to come

Key points are as follows:

  • The MPF system is on track to produce positive returns for Q2 and first half of 2024.
  • June’s current month-to-date investment gain is approximately 1.59% (as measured by the MPFR All Fund Performance Index as at 20th of June) (See Table 1) contributing to an estimated quarter-to-date gain of 3.46%, MPF’s 3rd consecutive quarterly gain; and an estimated year-to-date gain of 6.02%, which if achieved would be MPF’s best first half year performance since 2019 and its 5th best since MPF’s inception.
  • In absolute dollar terms, June’s month-to-date investment gain would be equivalent to $12.3bn (or $2,600 per MPF’s 4.75m members) contributing to a quarter-to-date investment gain of $34.1bn (or $7,200 per member) and year-to-date investment gain of $62.6bn (or $13,200 per member).
  • US equities is expected to top MPF’s performance table for the first half of 2024 and deliver its 4th highest first 6 calendar months’ return since MPF’s launch.
  • After factoring in contributions, total MPF assets are forecasted to end June at approximately $1.23tr (up $16.3bn from end of May, $46.9bn from Q1 and $89.3bn for year-to-date), which if achieved would be MPF’s all-time record high. It is equivalent to an average MPF account balance of $258,700 for MPF’s 4.75m members (up $3,400 from end of May, $9,900 for Q2 and $18,800 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 pointed out that total MPF assets could surpass an all-time record high by the end of June on the back of MPF’s best half year start since 2019. Aided by approximately $62bn of earnings derived largely from equity markets across the globe MPF Ratings also expects average MPF account balances to exceed $258,000.

Quotes:

While US equities continue to shine other markets are now also contributing to MPF gains

“US equities was last year’s clear winner and continues to contribute in 2024. Positively other markets are also now contributing too.  Approximately $62bn of investment gains have been added to MPF accounts so far this year. We expect investment returns in the first half of 2024 to be approximately 6% which would make it MPF’s 5th best half year start on record with returns coming from both local and overseas equity markets.”

Total MPF assets are expected to exceed its previous all-time record high, previously set in June 2021

“Based on our forecasted numbers, MPF Ratings expects MPF’s total assets to be approximately $1.23tr, the highest total assets on record, breaking the previous high watermark established in June 2021.  A profoundly positive result for MPF’s 4.75m members.”

Outlook for 2024 – investment sentiment appears to be turning as the US market goes over one year without a major sell off

“All equity markets are contributing positively to MPF’s first half growth with the US market leading the way. The S&P 500 has now gone over one year without a sell-off greater than 2%. That’s the longest stretch for the benchmark since the global financial crisis and underlies a confidence that suggests positive returns may continue despite ongoing inflation, interest rate and geo-political tensions. There is never investing certainty, only uncertainties, and uncertainties can be mitigated through disciplined savings, diversified investing and a focus on the long term.”

Table 1: MPF Ratings’ MPFR Index returns by asset class (as at 20th June 2024)

Source: MPF Ratings

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