MPF fund performance: 7.43pc gain in early 2012 put HK$10,000-plus in each pot

This article is a rewrite of a report from May 2012.

A mpf fund performance snapshot from Lipper, published in early May 2012, showed Hong Kong retirement savings riding the global equity rebound: in the first four months of 2012, MPF schemes gained an average of 7.43 per cent, putting more than HK$10,000 of paper gains into the average member’s account — though still short of recouping the HK$12,000-plus each member lost in 2011.

How strong were MPF returns in early 2012?

Lipper data showed MPF schemes gained an average of 7.43 per cent from January to April 2012, trailing the Hang Seng Index’s 14.4 per cent rise — up 2,660 points — over the same period. Based on total net assets of HK$356.035 billion at end-2011, and excluding new contributions made in 2012, the system added nearly HK$26.453 billion — about HK$10,281 per member across roughly 2.573 million employees and self-employed persons.

Which MPF funds led the rally?

Equity funds were the clear winners, up 11.12 per cent on average, followed by mixed-asset funds at 7.32 per cent. Among equity categories, Asia-Pacific ex-Japan funds led with 13.72 per cent; Hong Kong equity funds gained 12.77 per cent, while the popular China equity and Greater China equity funds rose 11.21 and 12.14 per cent respectively.

Why did analysts warn of a weaker quarter ahead?

April alone managed only a 0.25 per cent gain — better than March’s 1.37 per cent fall, but a sharp slowdown. Lipper’s Hong Kong head of research said the global rally from the fourth quarter of 2011 to end-February had built up sizable gains, and the correction starting in March could technically run until June, leaving the next two months at risk of negative returns. The wild card was Europe: the French presidential election, Greek parliamentary election and German state elections could all reignite the debt crisis. Still, he reminded members that MPF is long-term investing — pullbacks are chances to buy fund units cheaply — and he favoured China equity funds.

A companion report (ID 2978) uses the same Lipper data, from the angle of MPF trailing Hong Kong and mainland markets.