MPF fund performance: experts stay bullish on equity funds this year, favour Asia-Pacific

After two months of losses, Hong Kong MPF posted a modest “mini spring” last month, with equities still trailing bonds — Lipper Hong Kong data: July MPF averaged +0.18%, equities -0.24%, bonds +1.22%. But experts are unanimously optimistic on equity funds for the rest of the year, favouring Asia-Pacific equity funds.

Why favour Hong Kong equities?

An investment research director at an asset manager is mildly bullish for the next three months: markets have overcorrected, and better-than-expected corporate results favour Hong Kong equities outperforming this month. Signs of mainland inflation peaking would add fuel; as sentiment improves, money keeps flowing to growing Asia — now may be the time to accumulate Asia-Pacific ex-Japan equity funds.

Time to rotate from bonds to equities?

A consultancy’s MPF advisory managing director agrees equity funds remain attractive: investors with horizons of five years or more can gradually rotate bonds into heavier equity weightings. But she cautions China-equity investors not to expect huge H2 gains — if mainland inflation stays hot and tightening continues, Hong Kong stocks torn between China and the US could stay volatile; time entries well, and consider shifting focus to Asia-Pacific equities.

What did last month’s data show?

European equities crashed over 4%, North American equities fell 1.78%; Hong Kong and Greater China equities, each down over 4% in June, bounced 0.15% and 1.03% in July. Japan equities added 2.71% — last month’s best asset. For the first seven months, MPF averaged +1.58%; equities +0.95%, bonds +4.42% — Hong Kong equities at -1.55% remain furthest from “home”.

To track MPF return trends, visit MPF fund comparison.