MPF fund performance: October 2011 bounced an estimated 8.6%, but the year stayed in the red

After a frightening third quarter, MPF finally posted a respectable monthly scorecard in October 2011. As of 27 October, Morgan estimated MPF gained an average 8.62%, reversing September’s brutal 7.75% plunge — but stretch the lens to the full year and workers’ hard-earned savings were still underwater.

Why did monthly and year-to-date MPF fund performance diverge so sharply?

MPF fund performance rebounded an estimated 8.62% in October 2011, reversing September’s 7.75% plunge, but was still down 3.52% year to date. Based on total MPF assets of HK$365.443 billion at end-2010, members were collectively HK$12.863 billion underwater on paper; on average assets of HK$144,902 per member, each was down over HK$5,100. A single month can dazzle; the full year tells the truth — the hardest lesson in long-term investing.

MPF performance ranking: which fund types led October?

Equities were October’s big winners across the board:

After the battering of August and September, even long-lagging Japan and US/European equities joined the rally — the rebound was broad-based, not a single-market story.

What October 2011’s MPF performance teaches members

The real lesson is not October’s 8.62% but the “still down 3.52% year to date”: topping a monthly ranking does not mean a fund category makes you money for the year. MPF is a multi-decade marathon, and members should not keep switching strategy on short-term swings. The MPF education hub explains the role of equities, bonds and mixed-asset funds in a portfolio.