After the Q3 2011 rout, experts tipped Asia MPF equity funds for the rebound

In October 2011, Hong Kong’s MPF pots had shrivelled and members were watching paper losses pile up. The question was which MPF equity fund categories to favour after the crash. One expert’s answer: don’t hide — rebalance by age, and consider adding Asia and emerging-market equity funds now that valuations had sunk to bargain levels.

Which MPF equity fund categories did experts favour?

The call was for Asian and emerging-market equities. An investment director at a global asset manager argued that with regional price-earnings ratios down to around 10 times and future growth still outpacing developed markets, these MPF equity fund categories should beat bond funds over the long run. The caveat: with the European debt crisis unresolved, global equities were expected to stay volatile through Q4 2011.

How should age shape the strategy?

The advice split by life stage:

For young members, swapping decades of compounding potential for momentary peace of mind was an expensive trade.

How often should members switch funds?

Not often. Since professional managers run MPF portfolios, members cannot realistically time markets — so frequent switching between asset classes was discouraged. Anna Wu, then chairwoman of the MPFA, added the long-view reminder: MPF is a decades-long investment and should be judged on that horizon, not on one quarter’s turmoil.

For an introduction to asset classes, see the MPF education hub.