MPF Index Up 8.2% for the Year: MPF Returns Trail the Hang Seng

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

As MPF providers waged price wars, intermediaries burnished brands too. Convoy launched the “Convoy MPF Index” — Hong Kong’s first index tracking MPF performance: at least 100 of the largest funds, covering over 80% of total MPF assets. Through September, it was up 8.2% for the year.

How is the index built?

Rebalanced half-yearly, history back to 2000. The constituent mix and weights adjust every six months, with history traceable to 1 December 2000, free for the public. September read 166.76 points, up 8.2% from end-2011 — but trailing the Hang Seng’s 13.5% over the same period.

What about the long run?

Still down 11.5% over five years. The financial crisis once dragged the index down 15.6%; the recent equity rally narrowed the five-year loss to 11.5%. Since inception it was up nearly 17%, with the strongest surge in October 2007 at nearly 19%.

What is the lesson from 2012?

2012’s first MPF index finally gave workers a benchmark to ask: “Are my MPF returns any good?” Eight-point-two percent sounds fine — until it trails the Hang Seng; five years still underwater. Without an index, such comparisons were impossible. MPF returns were never absolute numbers but relative performance; benchmarks came first, accountability second.