MPF falls 0.5% in Q2, losing nearly HK$1.9 billion; half of product types trail inflation

The MPFA’s latest data shows MPF — even before August’s global market rout — fell 0.5% in the three months from April to end-June; on Q1 total assets of HK$378.28 billion, members collectively lost nearly HK$1.9 billion, the first quarterly loss since Lehman Brothers collapsed over two years ago.

What’s the overall state of MPF assets?

Total net MPF assets stood at HK$384.475 billion at mid-year; across more than 2.54 million members, the average account held HK$151,308 — up HK$6,406 (4.4%) from HK$144,902 at end-2010. The last time workers’ “blood-and-sweat money” shrank was 2009’s 25.9% post-Lehman plunge, fortunately followed by a 30.1% rebound the next year.

How does MPF stack up against inflation?

Over the past year, half of the six MPF product categories failed to beat inflation: conservative funds broke even at zero, while money-market funds — hurt by the weak US dollar — posted minus 0.5%. The CPI ran at 5.6%; over the longer run, MPF’s average net return of 5.1% since launch also trails inflation. Manulife’s Asia-Pacific head Rita Chang suggested adding a 10% gold weighting to portfolios as inflation roars.

How are fund sales holding up?

The Hong Kong Investment Funds Association said alternating equity- and bond-fund demand lifted first-half retail fund sales to HK$164.2 billion — the second-highest on record, up 66% year on year. Local fund penetration is about 15%, still below the near-20% peak of 2007. The association’s chairman William Ng stressed no net redemptions have appeared since July. Facing inflation and volatility, workers should review their MPF fund mix and learn long-term positioning via MPF education.