August market rout drags MPF down 7.74% in a month, wiping out year-to-date gains

Global stock markets swung violently in August 2011, and Hong Kong’s MPF was not spared: for the month to 25 August, MPF recorded an average loss of 7.74%, taking the cumulative loss for the first eight months to 6.04%. The 1.58% return workers had painstakingly built up over the first seven months was wiped out in a single month.

Which MPF fund types were hit hardest?

Equity funds bore the brunt, plunging an average 12.71% in August and 11.87% over the first eight months; mixed-asset funds lost 7.44% in August and 4.89% year to date. Thomson Reuters Lipper data showed persistent worries over the European debt crisis, compounded by the US credit-rating downgrade, triggered a global equity sell-off that dragged MPF performance down.

Did any MPF funds make money?

Bond funds were August’s only safe haven, edging up 0.78% in the month and 5.26% over the first eight months. Their defensive qualities once again steadied portfolios while equities tumbled.

What should MPF members do?

Sharp falls invite panic, but MPF is a long-term retirement investment — short-term volatility is no reason to switch funds rashly. Review whether your MPF fund mix still suits your age and risk tolerance, and brush up on MPF investment basics to manage your retirement savings with a long horizon.