23rd December 2024
Despite the setback, MPF is on track to deliver bumper annual earnings to its 4.75m members
Key points are as follows:
- After a strong year, the MPF system is limping to the end of 2024. Based on the MPF Ratings’ MPFR All Fund Performance Index (as at 18th of December), MPF Ratings is estimating a modest final month loss of -0.48%, contributing to a -3.18% quarter-to-date drop. (See Table 1)
- Despite losses, the MPF system is on track for a 9.19% annual return; a 2nd consecutive positive year, that if achieved, would be the best calendar year performance since 2020.
- In absolute dollar terms, December’s estimated month-to-date investment loss is equivalent to roughly -$10.1bn (or -$2,100 per MPF’s 4.75m members) resulting in a quarter-to-date loss of -$46.0bn (or -$9,700 per member).
- Again, notwithstanding the losses, MPF will deliver strong annual earnings to its members. MPF’s 2024 annual gain is estimated to be $102.8bn (or $21,600 per member), contributing to MPF’s total asset size to end at $1.291tr, the 4th highest level since MPF’s launch.
- Having been achieved once before in 2019 and 2020, leading MPF commentator says history says two consecutive years of annual earnings exceeding $100bn is possible but will depend on how President-Elect plays his “calling cards”.
Francis Chung (叢川普), Chairman of MPF Ratings Ltd, Hong Kong’s independent provider of MPF research, views and education today noted that he expects the MPF system to finish 2024 the same way it started the year – with a loss. However, Mr Chung also went on to say that calendar year 2024 is likely to end as the best year since 2020 with over $100bn in earnings added to MPF member accounts, the equivalent of roughly $21,600 for 4.75m members.
Quotes:
Despite final quarter and December losses, MPF set to deliver $100bn in earnings
“Despite a likely final month loss, MPF’s average account balance for its 4.75m members will balloon to over $270,000 courtesy of an annual investment gain of $100bn. If one was to offer MPF members a guaranteed $100bn in earnings at the beginning of 2024, I imagine most people would have happily taken it.”
Can $100bn in earnings be repeated in 2025?
“Prior to this year, the $100bn MPF earnings milestone was reached in both 2020 and 2019, so two consecutive years of $100bn in earnings is possible but there are uncertainties as President-Elect Trump’s inauguration approaches in January.”
2025 Outlook – Trump’s “calling cards”
“Protectionism and deregulation appear to be President-Elect, Donald Trump’s ‘calling cards’ and while this is proving popular for certain US equity sectors, there will also be unintended consequences. MPF members may be tempted to have a US bias in their MPF portfolios, but diversification minimizes uncertainty. The MPFA’s mandated DIS funds are well diversified while also having a bias to US equities making them an interesting investment option.”
Table 1: MPF Ratings’ MPFR Index returns by asset class (as at 18th December 2024)
Source: MPF Ratings
