MPF’s brutal Q3 2011: down 12.25%, HK$47.1 billion wiped out, HK$18,539 per worker

Over a ten-year horizon, MPF’s record looked respectable — but in Q3 2011, global equities collapsed and MPF’s total net asset value evaporated by more than HK$47.1 billion in a single quarter. Across roughly 2.54 million contributors at the time, that meant an average paper loss of about HK$18,539 per worker: alarming by any measure.

How much did MPF lose in Q3 2011?

MPF fell 12.25% on average in Q3 2011: total net assets shrank by over HK$47.1 billion from HK$384.4 billion at end-June, working out to about HK$18,539 in paper losses per contributor across roughly 2.54 million members; the annualised return since MPF’s inception, net of fees, had been 5.5% to end-2010 but had already shrunk to 5.1% by end-June 2011.

One quarter eats the long-term record

黃澤銘: match risk to your age

Lipper Hong Kong research head 黃澤銘 argued that volatile markets demand attention to return targets, monthly cash flow and risk tolerance. Young workers, decades from retirement with long contribution horizons, need not fear downturns — and could even favour higher-volatility equity funds. His prescription for young members holding multiple preserved accounts: an 80/20 split — 80% of preserved-account money consolidated into conservative money-market or bond funds, 20% in high-volatility equity funds such as Hong Kong and Greater China equities.

Employee Choice: competition to cut fees?

AXA’s Li Bingxi said the Employee Choice Arrangement (“semi-portability”), expected the following year, would flip the market from employer-led to employee-led: with employees free to choose trustees at least once a year, providers would compete on fees, fund choice and technology — pushing charges down. The industry was also introducing cheaper index funds, tipped to become MPF’s big direction.

What members can do

Downturns punish guesswork: review your mix against your age and risk tolerance rather than chasing quarterly numbers. The MPF education hub explains each fund category’s role.