January MPF returns turn positive, breaking three-year losing streak; Europe equity funds shine

Lipper statistics show Hong Kong’s 378 MPF funds averaged 0.63% in January — below December’s 2.7%, but still a result: the MPF had posted negative January returns for three straight years since 2008, so breaking the streak with a positive mpf fund performance print counts as decent.

Which funds shone brightest?

European equity funds reversed course with 4.08%. Equity funds again led the MPF pack with 0.98%; European equity funds turned last year’s slump around to post 4.08%; North American equity funds rose 1.99%; Hong Kong equity funds gained 0.54%. Under rate-hike clouds, China equity funds fell 1.13%, dragging Greater China equity funds down 0.44%; Asia-Pacific equity funds dropped 2.37%. The popular mixed-asset funds rose 0.58% (HKD aggressive mixed-asset up 0.83%); conservative money-market and guaranteed funds lagged at 0.01% and 0.36%.

What does the industry say about the outlook?

Cheap Western valuations offer catch-up potential, but mind the European debt crisis. Industry watchers say US and European equities look cheap versus Asia-Pacific — a catch-up opportunity — but warn US unemployment stays high and the European debt crisis is unresolved, with some European economies still fragile. Still, with ample liquidity, low rates and strong corporate earnings growth, Asia-Pacific’s long-term growth story remains intact.

To track MPF fund performance trends, visit MPF fund comparison.