25th March 2025
MPF members express regret as “Trump Slump” contributes to widest performance differential against US equities
Key points are as follows:
- Despite a volatile March, the MPF system is on track to produce a 3rd consecutive positive monthly return, with the MPFR All Fund Performance Index currently registering an investment gain of approximately 0.75% (as measured by the Index as at 20th of March).
- If March market results remain the same in the final week, it would take year-to-date gains to 4.87%; a 4th best Q1 result, and only the 7th time MPF has produced 3 consecutive positive monthly results to start a calendar year. (See Table 1)
- If results remain unchanged, in absolute dollar terms, March will see a month-to-date investment gain of approximately $5.0bn (or $1,100 per MPF’s 4.79m members) to take year-to-date investment gains to $57.9bn (or $12,100 per member).
- Hong Kong and China equities continue to lead the way in March, currently posting a month-to-date return of 5.21% while US equities is MPF’s worst performing asset class. Local equities’ year-to-date return would be 17.47%, making it its best Q1 performance since MPF’s launch while year-to-date divergence with US equities is widest Q1 differential against US equities.
- Assuming markets remain unchanged, total MPF assets inclusive of contributions would end March at approximately $1.361tr (up $69.9bn year-to-date), a record high since MPF’s launch, and equivalent to an average MPF account balance of $283,900 (up $14,600 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 highlighted that MPF’s Hong Kong and China equity segment’s strongest start to a calendar year is driving total assets in the MPF system to all time highs while noting that the record number of MPF members who tactically switched to US equities in 2024 maybe regretting the decision as the Trump’s “Bump” turns into a “Trump Slump”, contributing to the widest ever recorded Hong Kong and China equity versus US equity year-to-date performance divergence away from the US.
Based on MPF Ratings’ MPFR All Fund Performance Index, the MPF system is forecasted to produce a modest March investment gain of approximately 0.75%, an absolute dollar equivalent of approximately $5.0bn, or $1,100 per MPF’s 4.79m members. After factoring in MPF contributions, total MPF assets would stand at a record $1.361tr, moreover, MPF’s first quarter 2025 gain would be approximately $57.9bn, the equivalent of about $12,100 per member.
Quotes:
The importance of Hong Kong and China equities on MPF results cannot be overstated
“MPF’s Hong Kong and China equity segment is following up a 15.90% 2024 return with a forecasted 2025 first quarter return of 17%. That’s a 30% return in 15 months. With over 18% market share, Hong Kong and China equities is MPF’s largest asset class, so a strong rebound benefits a significant number of MPF members.”
Despite US sponsored March equity market volatility, Q1 2025 is still shaping as one of MPF’s best
“Despite US market sponsored volatility in March, the MPF system is still on track for 3rd consecutive positive performance month. On the 6 previous occasions this has occurred, 4 resulted in a positive full year return at an average of approximately 16%.”
No one ever made money buying high and selling low
“Hong Kong and China equities’ best start to a calendar year sees local markets outperform the US by over 20%, the biggest Q1 quarterly performance divergence in MPF’s almost 25-year history. This performance difference against the US is a salient lesson for those MPF members who switched out of local equities and into US equities in record numbers in 2024. Chasing returns is a fundamentally flawed long-term investment strategy. No one ever made money buying high and selling low. Diversification minimizes uncertainty and that the MPFA’s mandated DIS funds, with its broad asset class investments and automatic de-risking mechanism, are ideal to minimize uncertainty.”
Table 1: MPF Ratings’ MPFR Index returns by asset class (as at 20th March 2025)
Source: MPF Ratings
