HK$17 Billion Chases the Leaderboard: the Winner’s Curse Comes Due in MPF After a +77% Korean Fund Tops the Year

The third-quarter report cards are out, and the MPF leaderboard is a textbook study in extremes: the best-performing constituent fund is up 77.42% year to date, the worst is down 10.11% — a spread of 87.53 percentage points. The same GUM report published another set of numbers alongside: a net HK$17 billion flowed into US, Japan and Asia equity funds so far this year, while more than HK$10 billion flowed out of Hong Kong equity funds.

The leaderboard’s winners are the fund flows’ winners. GUM states the causality plainly: the AI and semiconductor wave lifted US, Japanese and Korean equities, and members piled in.

The problem is that Morningstar has spent a decade proving the other half of this story: the hotter a fund is to handle, the less of its returns investors actually capture. The leaderboard-chasing money is in. History says it will most likely never earn the returns printed on the leaderboard.

Through the data: money goes where the leaderboard points

Start with GUM’s third-quarter scorecard (to 30 September 2026) by fund category:

Now the fund-level MPFGo rankings (September data): the top five year-to-date performers are all Korea and Asia equity funds — the Haitong Korea Fund (Class T) leads at +77.42%, followed by the Haitong Asia Pacific Fund (Class T) at +44.83%, three BEA Asia equity funds at +37.14%, +37.01% and +36.90%, and the Sun Life MPF Asian Equity Fund (Class B) at +35.27%. At the bottom: the BOC-Prudential China Equity Fund at -10.11%, the BEA China Tracker Fund at -6.99%, and the Hang Seng China Enterprises Index Fund at -6.89%.

September’s monthly board was even more polarised: the top five were all Korea and Asia equity funds (Haitong Korea Class T at +3.37% for the month), while the bottom ten were all Hong Kong or China equity funds (the Fidelity Retirement Integrated Trust Hong Kong Equity Fund last at -4.46%).

Flow direction matches leaderboard direction exactly: buy the winners, sell the losers. GUM’s strategy and investment analysis director notes that full-year fund switching is on track to reach HK$74.7 billion, up more than 25% year on year and a five-year high — eMPF has made switching a minutes-long affair, so chasing the leaderboard has never been easier or bigger. HK$74.7 billion is 44% of the system’s HK$1.684 trillion in assets: nearly half the system’s money changed address within a year.

The compounding cost: the maths of the chase tax

Morningstar’s Mind the Gap 2026 studied nearly 23,000 funds: investors earned 8.7% annualised against the funds’ reported 9.9% — a 1.2 percentage-point annual gap, and the gap for international equity ETFs reached 2.5 points, the widest of any category. Morningstar’s September 2026 thematic-ETF study added the kicker: the longer the holding period, the wider the gap. The US$95 billion that chased thematic ETFs in 2020–21 earned an average of -13% over the following twelve months.

Translate those gaps into Hong Kong dollars. Illustrative sandbox: HK$5,000 a month for 30 years at a 7% gross return:

• Zero gap: about HK$6.10 million
• A 1.2pp behaviour tax: about HK$4.83 million — a shortfall of roughly HK$1.27 million, or 3.7 times the average member balance of HK$338,950
• A 2.5pp gap (international-equity-ETF grade): about HK$3.80 million — a shortfall of roughly HK$2.30 million, nearly seven times the average balance

A 1.2% annual gap on an average balance of HK$338,950 is about HK$4,100 evaporating from every member’s pocket each year.

The settlement has already begun. GUM’s Q3 data shows Hong Kong equity funds returned +8.3% in the third quarter alone — the best of any category — while the members who rotated more than HK$10 billion out sold ahead of the rebound. Asia equity funds, meanwhile, pulled back in Q3 on July’s AI-valuation scare and semiconductor pullback — the HK$17 billion that chased in arrived ahead of the drawdown. September’s system-wide -1.47% (HK$5,060 per member) is what the month the crowded trade gets hit first looks like.

The way out: turn the leaderboard into a rebalancing signal, not a buy order

First, rule-based rebalancing. Fix satellite exposures such as Asia equity at a set share of the portfolio (say 20%) and trim anything above target back to it every quarter or half-year: winners get cut automatically, losers get topped up automatically. Morningstar analyst Jeff Ptak’s advice is one sentence long: automate as much as you can.

Second, the protection of the default menu. Morningstar found that funds on retirement-plan menus show markedly narrower investor gaps — fewer choices, less chasing. The DIS Core Accumulation Fund returned 9.5% over the past twelve months, beating the mixed-asset fund average of 8.5%, with 7.1% annualised since launch and an actual average fee of only about 0.77%. Even GUM’s own chief investment officer recommends the Core Accumulation Fund for medium-risk members. The experts say diversify; the flows say concentrate on the leaderboard. Side with the experts.

Third, forward-pricing defence. The price on the leaderboard is a price you cannot buy. MPF fund switches settle on T+1/T+2 forward pricing: you see +77.42% and place the order, but the trade executes at an unknown future price. Chasing the board is buying blind. Split large switches into tranches and steer clear of volatility windows such as the 27–28 October Fed meeting.

The leaderboard is not going away, and neither is the winner’s curse. But HK$17 billion has now proved the point: those who buy by staring at the rankings pay the most expensive tuition in the room.