MPF returns: equity funds down more than 10% year-to-date, bond funds up over 4% against the trend

The global equity sell-off continued in September 2011, and even workers who never bought a single share felt it in their MPF returns: unless an MPF portfolio had zero exposure to local or overseas stock markets, its recent returns would have slid noticeably.

Why did MPF returns fall so sharply?

MPF returns follow the markets they invest in: equity funds are heavily exposed to stocks, so their returns suffer when markets fall. According to the latest figures released by the Hong Kong government, MPF as a whole lost nearly 8% from the start of 2011 to mid-September; equity funds generally lost more than 10%, with the worst-hit equity fund down nearly 15%; the only respectable performers were bond funds, whose returns grew by more than 4%.

Fund analysts noted the global economy remained weak, leaving equity funds exposed to further short-term risk, while Hong Kong equities — the market closest to local workers — had already fallen more than 20%. As MPF is a long-term investment, analysts suggested new MPF investors consider capital-preservation funds in the prevailing conditions.

To check MPF fund returns by category, see MPF fund search.