MPF Down 4% in First Half; Average Loss HK$6,500 Wipes Out the HK$6,000 Handout

Choppy global markets dragged MPF to a 4% loss in the first half of 2011 — the average member lost HK$6,500, more than wiping out the government’s HK$6,000 handout.

How bad was it?

Down 4% overall, HK$6,500 per member. Weighed down by the European debt crisis and global uncertainty, equity funds bore the brunt and the system posted negative first-half returns. The government’s HK$6,000 payout that year couldn’t cover what members had already lost in MPF.

Why so painful?

When markets fall everywhere, there’s nowhere to hide. As the euro crisis festered in early 2011, global equities sank together and MPF equity funds had no shelter. Conservative and guaranteed funds fell less, but the system still finished in the red.

How should members respond?

Don’t slash and switch after one bad half — MPF is measured in decades. Short-term swings are normal; panic-switching to conservative funds risks missing the rebound. Review your risk appetite and make sure the mix fits your age and time to retirement. Compare MPF funds’ fees and track records at MPF fund comparison.