Inside the 249 points: January’s MPF surge was equities up 13%, bonds at 0.3%

As at 30 January, the Convoy MPF Composite Index stood at 249 points, up 5.36 per cent on the month — its seventh consecutive record high and its biggest single-month gain since 2015. There was essentially one reason: relentlessly buoyant equity markets. Break the index apart, and January was almost a one-asset show.

Index components: all the gains came from equities

Equity funds rose close to 13 per cent in the month; the bond index barely moved. The composite’s 5.36 per cent gain is essentially the equity index’s 7.7 per cent weighted through — bonds contributed almost nothing.

How the HK$10,654 per-head figure is derived

Based on the MPFA’s 4.19 million scheme members as at December 2016, the average paper gain per member in January 2018 was about HK$10,654. It is an average: members tilted toward equity funds did better than that; those mainly in conservative funds did worse. The index tells you how good the market was; only your account tells you how good you were.

What it means for members

A rally led by a single asset class carries three reminders:

1. Diversification is not a slogan: equity funds can fall as fast as they rose 13 per cent — the bond and conservative slices of a portfolio exist for the day they do.
2. Look past the average: the per-head figure is a headline; your number is behind your account login.
3. Rebalance at the top: after seven straight record highs, ask whether your equity-bond split is still the long-term mix you set — and rebalance if it has drifted.

249 points closes the book on January. It guarantees nothing about February.