MPF fund performance jumps 8.44pc in two months, erasing 2011 losses — but analysts urge caution

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

MPF fund performance got off to a flying start in 2012: after a 4.9 per cent gain in January, funds rose another 3.54 per cent in February, taking the two-month cumulative return to 8.44 per cent — fully wiping out the 8.4 per cent loss for the whole of 2011. Analysts, however, say piling into aggressive funds now could be premature, with Europe’s outlook still murky.

How good were MPF returns in the first two months?

MPF funds returned a cumulative 8.44 per cent in the first two months of 2012 (Thomson Reuters Lipper, as of end-February), fully recouping 2011’s 8.4 per cent loss. On MPFA figures — HK$356 billion across 2.573 million members — the average worker gained nearly HK$12,000.

Which fund categories led in February?

Greater China equity funds and Hong Kong equity funds led February, rising 6.7 per cent and 6.49 per cent. Equity funds as a whole gained 5.46 per cent, far outpacing bond funds at 0.18 per cent, while China equity funds were up 20.96 per cent over three months — the best globally.

The Hong Kong head of an investment consultancy noted that Greater China’s three-month lead was “no surprise”, since the region had suffered the steepest falls in the second half of 2011 and was simply bouncing hardest.

Why do analysts warn against switching to aggressive portfolios now?

Analysts say Europe remains ‘unreadable’, with Asian markets prone to sharp swings — mistimed bets could prove costly. With crude prices up markedly over six months potentially stoking US inflation, a pullback in the coming weeks looks likely.

The advice: stay balanced and “play it safe” rather than betting on equities after two good months. Members can compare fund categories and track records via the MPF education hub.