5th November 2024
Patience and diversification is key says leading MPF commentator
MPF Ratings’ October MPF Performance Survey has now been uploaded.
Key points are as follows:
- After hitting all-time MPF total asset and average account sizes in September, the system recorded a monthly loss of -2.85% in October (as measured by MPF Ratings’ MPFR All Fund Performance Index) trimming MPF’s year-to-date gain to 9.56%, a return which still ranks as the best calendar year-to-date performance since 2017. (See Table 1)
- In absolute dollar terms, October’s investment loss is equivalent to roughly -$37.8bn (or -$7,900 per MPF’s 4.75m members) reducing year-to-date gains within the MPF system to $111.1bn (or $23,400 per member).
- Losses were seen across most asset classes with Hong Kong and China equities falling -4.58% in October after failing to capitalize on September’s strong stimulus driven rally. Despite this setback, local and US equities remain the best performing MPF fund categories year-to-date.
- As a result of October’s monthly loss, MPF Ratings expects MPF’s total asset size to slip from $1.327tr to $1.293tr while average member account balances are expected to fall to $271,900, down $7,200 from $279,100.
- Despite October’s setback, if the MPF system maintains its 2024 average monthly return in November and December it should deliver record asset sizes and account balances for its 4.75m members by the end of this year.
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’ October MPF Performance Survey by noting that MPF total assets and average account sizes were trimmed in October as the MPF system recorded a monthly investment loss of -2.85%. The result sees MPF’s total asset size slip from $1.327tr to $1.293tr while the average MPF account balance fell $7,200 to $271,900 per MPF’s 4.75m members. Despite the investment losses, the system is still producing its best year-to-date returns since 2017 and Mr Chung is confident the system will deliver record asset sizes and account balances by the end of this year.
Quotes:
Despite October’s return setback, MPF Ratings still expects the MPF system to deliver record asset and account balances by the end of 2024.
“Despite October’s return setback, MPF Ratings still expects the MPF system to deliver record asset and account balances by the end of 2024. If the system maintains its 2024 average monthly return in November and December then MPF’s total asset size should exceed the previous high of $1.327tr level which was reached in Q3 of this year.”
Losses recorded across the board as Hong Kong and China equities fail to capitalize on September’s stimulus driven market rally.
“MPF saw losses across almost all asset classes with Hong Kong and China equities failing to capitalize on September’s stimulus driven rally. This lack of momentum will frustrate many MPF members given it is MPF’s largest asset class.”
Outlook – Diversification and patience is key to ensuring MPF ends 2024 at record levels
“The key to ending 2024 at record levels is patience and diversification. There is always a temptation to react to market volatility but it’s essential for members to remain well diversified and patient. For many MPF members, the MPFA’s Default Investment Strategy (DIS) funds are ideal. Low fees, well diversified, and an automatic risk reduction mechanism removes the temptation for short term trading.”
Table 1: MPF Ratings’ MPFR Index returns by asset class (as at 31st October 2024)
Source: MPF Ratings
Table 2: 10 best performing MPF constituent funds for the month of October 2024
Source: MPF Ratings
Table 3: 10 best performing MPF constituent funds for year-to-date 2024
Source: MPF Ratings
Table 4: 10 worst performing MPF constituent funds for the month of October 2024
Source: MPF Ratings
Table 5: 10 worst performing MPF constituent funds for year-to-date 2024
Source: MPF Ratings
