MPF fund performance: Hong Kong posts worst quarterly loss on record in Q3 2011

As of 30 September 2011, MPF fund performance had hit a historic low: the scheme fell 7.75% in September — its second straight monthly decline — taking the third-quarter loss to 12.25%, worse than the 11.6% drop in Q3 2008 during the financial crisis. According to Lipper data released at the time, equity funds were the main culprit.

Which equity funds fell hardest?

Every equity category lost money in September and across the quarter. China equity was the worst: down 18.17% in the month and 26.88% for Q3. Greater China stocks fell 17.83% and 24.51%; Hong Kong equity lost 15.44% in September, extending the quarterly drop to 22.71%; Korean stocks slid 10.84% and 24.2%.

Why were bond funds the refuge?

Bond funds dipped 2.04% in September but stayed positive for the quarter (+0.13%) and the year to date (+3.37%) — the only category in the black. While equity funds shed nearly a fifth of their value in Q3, bonds lived up to their defensive billing.

How should members read these numbers?

Shocking as a single quarter looks, MPF is a long-term investment. The MPFA stressed at the time that returns should be judged over years, not on one extreme quarter. Compare long-run fund performance with the MPF fund comparison tool.