Best MPF fund Hong Kong? Do your homework on Hong Kong equity funds before semi-portability

This article is a rewrite of a report from February 2012.

Semi-portability is about to let members choose their own Hong Kong equity funds. Which one to pick — and is a bull-market record enough? The 2012 data says no: bear markets are the real test.

How should members pick funds for bull and bear markets?

A five-year review found beating the market was easy for fund managers in rallies, but in downturns stock-picking was truly tested — only about 30% of Hong Kong equity funds outperformed. Members should study each fund’s record in both rising and falling markets to judge a manager’s real stock-picking skill and find the more reliable options, not just chase bull-market numbers.

Which Hong Kong equity funds once beat the market by streets?

The Haitong Hong Kong SAR Fund surged 99.2% in 2007, the year’s best performer against a 50.46% sector average; the Sun Life First State Hong Kong Equity Fund then dominated 2009–2011 with +74.67%, +24.65% and -10.76%. (Figures as of February 2012.) The right pick could be very rewarding.

What else should members watch?

Check whether the fund has recently changed managers — a new manager can alter the investment approach, strategy and stock-picking ability, making past returns unreliable. With semi-portability widening choice, homework matters more than ever: compare MPF funds’ fees and performance rather than following the crowd.