How Should MPF Returns Be Calculated?

Why did 2011 figures differ so much?

In August 2011, reports noted MPF return statistics varied wildly by method: the MPFA used money-weighted returns while Lipper used time-weighted returns. For the first half of 2011, Lipper showed a 1.05% fall while the MPFA reported 0.2% growth. The former assumes a lump sum invested at the start; the latter spreads monthly contributions into the calculation.

Which method suits members?

Workers contributing monthly find money-weighted returns closer to reality. But both have limits: money-weighted figures are swayed by contribution timing, time-weighted ones ignore contribution rhythms. A return number means little without knowing the method.

What else matters besides returns?

Returns alone aren’t enough — fees devour them. Compare both together at MPF fund comparison.