Back in 2011: MPF accounts lost a tenth of their value in nine months

Looking back at 2011, the European debt crisis swept through global markets, and Hong Kong’s MPF could not escape. By the end of that September, the city’s roughly 2.5 million MPF employee accounts had lost a tenth of their value on average over the first nine months — for many workers, the first time since the 2008 financial crisis that they felt their retirement savings shrink so sharply.

How bad were MPF losses in 2011?

MPF losses mean the scheme’s funds recorded negative returns and members’ balances shrank on paper. In the first three quarters of 2011, Lipper data showed the MPF’s 417 funds fell 10.68% combined, leaving the average employee account down a tenth — the worst three-quarter stretch since the 2008 financial crisis.

September alone saw MPF funds fall 7.75% on average, against a 14.5% plunge in the Hang Seng Index. In other words, while MPF portfolios were badly bruised, they still beat the broader market by about 7 percentage points — diversification offered at least some cushion in the crash.

The Asia-Pacific chief executive of RCM said at the time that the MPF’s showing reflected the uncertainty facing investors worldwide. With the debt crisis and slowing global growth bearing down together, almost no asset class was spared.

For today’s workers, the 2011 lesson still holds: the MPF is a long-term investment, and short-term swings are unavoidable. Rather than panicking at the market’s worst moment, what matters more is checking whether your fund mix still matches your age and risk tolerance.