MPF returns trailing inflation? Judge returns alongside fees

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

MPF turned positive in mid-2012, earning over HK$6,000 per worker in the first seven months — decent on paper. But MPF returns should never be judged on headline numbers alone — net of fees, and against inflation, is what counts.

Why discount the numbers?

Because fees ate a slice. Fund expense ratios and trustee administration fees all come out of your accrued benefits. A 4.39% return does not mean 4.39% in your pocket.

Why compare against inflation?

Because retirement purchases get dearer. Positive nominal returns do not mean growing purchasing power — in high inflation, low returns can be negative returns in real terms.

What is the right lens?

Net returns, long horizon. Compare funds on post-fee performance across market cycles. Flattering short-term figures do not guarantee a fit for your retirement horizon.