MPF equity fund crash: 2011 cost members about HK$10,000 each

With six trading days left in 2011, a full-year MPF loss was a foregone conclusion. Morgan Asset Management forecast a drop of about 7% — which worked out at more than HK$10,000 per member, exceeding even the government’s HK$6,000 handout that year.

How much did MPF members lose in 2011?

According to Lipper data to end-November 2011, MPF schemes had lost 8.67% year to date, and Morgan Asset Management forecast a full-year drop of about 7%. On total assets of HK$365.4 billion at end-2010, that meant over HK$25.5 billion wiped out — about HK$10,143 per member, far more than the government’s HK$6,000 handout. Only bond funds stayed positive, averaging 2.52%.

MPF equity fund: the year’s biggest loser

The three most popular Hong Kong funds — China equity, Greater China equity and Hong Kong equity — all fell 22%, while the US equity funds written off at the year’s start lost just 1.1%. Morgan’s investment information director saw the downturn as a chance to stock up ammunition, urging long-term investors not to despair.

Era note

2011 was MPF’s fourth losing year in eleven, and its second-worst drop ever. But history kept showing that MPF’s worst years were followed by strong rebounds — as after the 2008 crisis. For members far from retirement, keeping up contributions — or even buying cheap — in a downturn is exactly when dollar-cost averaging does its work. See the MPF education guides for downturn strategies.