mpf fund performance 2011: down 8.4% for the year

Hong Kong workers’ compulsory MPF savings finally got their 2011 report card. According to Thomson Reuters Lipper’s report published in January 2012, full-year mpf fund performance to 31 December 2011 was down 8.4% — the worst year since the 2008 financial tsunami. Workers lost about HK$29.2 billion between them, roughly HK$11,500 per person.

Which MPF fund category fared worst in 2011?

Greater China equity funds were the disaster zone of 2011 mpf fund performance, losing nearly 20%; the only category in positive territory was bond funds, up 2.7% for the year. Equity funds as a whole fell 15.1%, with Greater China, Hong Kong and China equity funds — dragged down by Hong Kong and A-shares — losing around a fifth. The once high-flying equity funds showed their high-risk colours.

How did bond funds escape unscathed?

As the European debt crisis deepened in the second half of 2011, money fled to safe havens and bond prices benefited; meanwhile US equities rose nearly 5% for the year, yet North America equity funds still lost money — proof that picking the right asset class matters more than picking the right market. For conservative investors, money market funds ended the year flat, at least preserving capital.

After a losing year, what should you do?

One bad year does not invalidate a long-term strategy. MPF is a decade-plus investment: after the 26% crash of 2008 came a 26% rebound the next year, and history says the lows are the worst time to sell. Rather than crystallising losses in a downturn, check whether your mix still suits your life stage and risk tolerance. Compare fees and long-term returns at browse MPF funds or read the investment guides in the MPF education hub.