2010 MPF Returns Review: Asia Equity Funds on Top — US Funds Next?

Reviewing 2010 MPF fund performance is the moment to think about positioning for the new year. Asia-Pacific equity MPF funds dominated last year, but with inflation threats and mainland monetary tightening, industry watchers think US equity funds could take the lead this year.

Which MPF funds performed best in 2010?

Korea equity funds surged 17.15% to top the table, with Asia-Pacific funds sweeping the top five. Despite Korean peninsula tensions, Korean equities kept climbing — Korea equity MPF funds gained 17.15% for the year, while the Asia-Pacific (ex-Japan) equity category returned 15.19%, filling the top five with roughly 20% gains. But note: Korea and Asia-Pacific equity funds still haven’t recovered their pre-crisis levels — three-year returns remain down 15.47% and 5.28% respectively.

How should members position for 2011?

Asia faces headwinds; lagging US equities may take over. Morningstar Asia senior analyst Ming Wai-hung notes inflation pressure in emerging Asia exceeds that in Europe and the US, and investors fear excessive central-bank tightening will lift costs and hurt equities — with capital seeking an outlet, more investors are warming to US stocks. North America equity funds already climbed to third in the MPF rankings last year, up 11.84% — well above the 7.15% all-category average. The euro, meanwhile, stays weighed down by the debt crisis.

Are conservative funds worth considering?

HKD and USD money funds barely broke even last year; conservative funds lost 1%. HKD and USD money funds averaged just 0.03% last year, with bank-deposit-heavy conservative funds the worst at -1%. But analysts reckon the dollar’s weakest days are past, so this year could bring a turnaround — conservative members should keep an eye on it.

To compare charges and returns across MPF funds, visit MPF fund comparison.