First-Half 2011 MPF Performance Ranking: Reading the Best and Worst Funds

The original report presented two charts ranking the five best- and five worst-performing MPF funds of the first half of 2011. The charts carried no commentary — but this MPF performance ranking is a good reminder that rankings only describe the past. Read them properly, and short-term chart-toppers will not sweep you off your feet.

Why do fund rankings get so much attention?

Everyone wants to know the winners and losers — but the story behind the ranking matters more. The first half brought earthquakes in Japan, Europe’s debt crisis and multiple market shocks, splitting regions and asset classes wide apart and creating a huge gap between the top and bottom of the table. When reading a ranking, do not just ask who came first or last. Ask: what category is it in, what market forces drove it, and did peers do just as well?

What are the traps in ranking tables?

The biggest trap is mistaking a short-term champion for a long-term winner. A fund that topped the first half may simply have been overweight the hottest market at the time; fortunes reverse, and it can slide to the bottom just as fast. MPF is a decades-long investment — overhauling your portfolio on six months of rankings is a poor bet. Rankings also hide fees: two funds with similar headline returns can deliver very different long-run outcomes once charges are factored in.

How should you actually use a ranking?

Treat it as a health check, not a buy or sell order. Use the table to see whether funds you hold sit persistently at the bottom of their peer group — and if so, investigate whether it is the market cycle or the fund itself. And stay diversified: never pile all contributions into whatever category topped the last half-year. Regular reviews and long holding periods are the right MPF mindset.

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