MPF fund performance slumps over 5% in a month: adviser urges members to stay the course

In August 2011, shaky external markets dragged Hong Kong MPF fund performance down more than 5% in a single month, leaving many members rattled and tempted to switch. An investment consultant speaking in mid-September had one message: the MPF is a marathon — don’t swerve at every bump.

Should you switch your MPF portfolio when markets swing?

No — don’t overhaul your MPF portfolio on short-term market swings: the MPF is a long-term investment, and members should set their asset mix by age and risk tolerance before investing rather than chopping and changing with every market move.

Let age set your equity weight

A Towers Watson Hong Kong director advised members nearing retirement to cut their equity weight to 20–30%; younger members can go as aggressive as 90% equities, with at least 20–30% in Hong Kong stocks to counter local inflation pressure.

European debt unresolved: what about bonds?

Although the European debt crisis was unresolved at the time, he estimated funds held little troubled European sovereign debt — and European bonds had performed decently — so there was no need to deliberately cut European bond exposure; global bond funds could spread the risk.

Can full-year returns turn positive?

He admitted the next few months were impossible to predict, but hoped full-year MPF returns would climb back into positive territory.

For long-term investing basics, see the MPF education hub.