MPF fund performance: September 2011’s 7.75% plunge, worst since the financial crisis

As of September 2011, weak global equities dragged MPF fund performance down for a second straight month: after August’s 5.27% fall, September brought a further 7.75% drop — the bleakest month since the financial crisis. Equity funds suffered most, plunging 12.01% in a single month. Experts warned that with external conditions unstable and Hong Kong stocks swinging wildly, the near-term outlook was hard to call optimistic.

Why did MPF fund performance collapse in September 2011?

September 2011’s MPF rout was driven by global equities battered on multiple fronts, while Hong Kong’s free capital flows and transparency drew speculators who whipped the market up and down. Every category finished in the red except money market funds: equity funds crashed 12.01% and the average fell 7.75%, the worst month since the financial crisis.

September returns by fund category:

China equity funds fell hardest, sliding 18.17% on the month — a steeper drop than August’s 10.12%. Hong Kong equity funds fared little better, down more than 15%. Even the more conservative bond and guaranteed funds lost 2.04% and 1.63% respectively; only money market funds stayed positive.

The head of Lipper’s Hong Kong research unit said China, the US and Europe each had their own troubles: China was grappling with an informal-lending blow-up, Europe with its debt crisis, and the US with endless fiscal wrangling — equities, caught in the crossfire, had little chance of turning up. He added that Hong Kong was the most volatile of all markets precisely because free capital movement and high transparency invited speculators to trade it aggressively in both directions.

To see how different MPF fund categories have performed over the long run, browse MPF funds.