22nd August 2024
MPF sets its sights on $1.248tr as earnings set to top $73bn
Key points are as follows:
- Despite major market corrections, the MPF system is currently on track to record a 6th positive monthly return in 2024. The MPFR All Fund Performance Index (as at 19th of August) is presently showing a 0.83% return contributing to an estimated year-to-date gain of 6.61% which is MPF’s 6th best since inception. (See Table 1)
- In absolute dollar terms, August’s current month-to-date investment gain would be equivalent to $7.1bn (or $1,500 per MPF’s 4.75m members) contributing to a year-to-date investment gain of $73.5bn (or $15,500 per member).
- MPF’s only asset class currently posting a negative monthly return is Japanese equities. While currently down -2.84% (Also see Table 1), the asset class has rebounded sharply following the Nikkei 225’s largest ever daily points drop on the 5th of August.
- US equities is 2024’s best performing MPF asset class but notably “other equities”, which is dominated by Manulife’s MPF Healthcare Fund, is ranked 1st in August highlighting the diversification benefits of the Healthcare sector in times of high volatility. (Also see Table 1)
- After factoring in contributions, total MPF assets are currently on track to end August at approximately $1.248tr (up $11.1bn from end of July and $107.7bn for year-to-date), which if achieved would be a 3rd consecutive monthly all-time MPF record, equivalent to an average MPF account balance of $262,600 for MPF’s 4.75m members (up $2,300 from end of July and $22,700 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 despite August’s extreme intra-month market volatility, which saw US share indices momentarily falling into “correction” territory and Japan’s Nikkei 225 Index record its largest ever single day points decline, the MPF system is on track to record a positive monthly return and deliver approximately $7.1bn in earnings to take MPF’s total 2024 earnings to around $73.5bn, contributing to a record MPF asset size of $1.248tr.
Quotes:
Despite a rollercoaster ride there’s plenty for MPF members to cheer about
“Despite a rollercoaster ride which saw the US Nasdaq briefly fall into correction territory and Japanese equities record its largest daily points drop, MPF may yet finish August positively. Positive returns, $73bn in annual investment earnings, a total asset record of $1.248tr and an average MPF member account balance of over $262,000 are headlines which give MPF members have plenty to cheer about.”
Intra-month equity market volatility is a powerful lesson for MPF members
“On the 2nd of August, the US Nasdaq market closed more than 10% below its record high recorded one month earlier, and on the 5th of August the Nikkei 225 Index was down over 12% as it suffered its largest points drop ever. Selling would have been an expensive mistake as markets rebounded, highlighting the importance of diversification and remaining invested.”
Outlook for 2024 – Market volatility set to continue
“A confluence of factors may continue to disrupt markets. Japan’s ‘carry trade’ is unwinding, US interest rate discussions are animating, the US election is approaching, and Mainland growth concerns persist. August saw markets ‘whip-sword’, highlighting the importance of diversification, remaining invested and topping up investments when there is a short term dip. The bottom line is diversified long term focused investing is key to successful retirement investing.”
Table 1: MPF Ratings’ MPFR Index returns by asset class (as at 19th August 2024)
Source: MPF Ratings
