MPF’s ten-year report card: 5.5% annualised return beats inflation — but fees eat the gains, critics say

A decade into the MPF, the MPFA published its ten-year investment review: for the period to 31 December 2010, MPF returned 5.5% a year annualised after fees and charges — beating inflation (0.7% a year) and one-month HKD deposit rates (1.0%). But analysts call the return mediocre, blaming high fees for eating into gains.

Which fund types did best over ten years?

Equity funds returned most — and carried most risk; conservative funds returned least — with least risk. Ten-year annualised returns: equity 5.7%, mixed-asset 4.9%, bond 3.9%, guaranteed 1.6%, MPF conservative 1.2%, money market and others 0.8%. Cumulatively, equity funds gained 75.4%, led by Asian equity at 9.7% annualised.

How do fees eat returns?

Because fund houses fold even advertising costs into charges — and collect management fees regardless of performance. Hong Kong Investment Society chairman Samuel Tam argues MPF works like ordinary funds yet returns less while charging more, with ad spending folded into fees — a practice worth reviewing. He cites HSBC’s Hang Seng Index fund: run much like the Tracker Fund (2800), yet charging 2% versus the Tracker’s 0.9%.

How much did members actually make in ten years?

Net contributions of $277.52 billion grew into $365.44 billion of accrued benefits — a gain of $87.92 billion. Still, analysts advise picking low-fee MPF funds over high-return-but-high-fee ones, since returns are modest anyway.

To compare fund fees and ten-year records, visit MPF fund comparison.