MPF Strategy: Buy Asia Equities — HK Equity Funds Once Bounced 49%

A July 2011 MPF strategy analysis argued that Asian equities offer strong long-term growth, so MPF portfolios can tilt toward Asia equity funds — with risk kept in check.

Why favour Asian equities?

Because HK equity funds rocketed 49% in the first half of 2009. Asia’s economy led the post-crisis recovery, and Hong Kong equity funds averaged a 49% rebound in H1 2009 — proof of the region’s explosive upside. Long term, Asia’s faster economic growth implies bigger equity return potential than the US or Europe.

So go all-in on equity funds?

No — allocate by age and risk appetite. Young members can afford aggression with heavier equity weightings; those nearing retirement should trim equities toward bonds and conservative funds. Don’t go all-in on a hunch; diversification rules.

What are the risks?

Asian equities swing hard — you must stomach it. Asia equity funds fall as fast as they rise, as 2008 showed. Members must tolerate volatility and resist panic-selling in downturns. Compare MPF funds’ fees and track records at MPF fund comparison.