The +10.3% Mirage: MPFA Data Exposes a 114-Point Dispersion No Average Can Hide

Track 1 — Data X-Ray | 2026-10-06

The Proposition

The MPFA released provisional investment return data for the period ending 30 September 2026 today. Tomorrow’s headlines practically write themselves: “MPF equity funds averaged +10.3% over the past 12 months.” The number is correct. The “average” is a statistical mirage.

Buried in the same release are two figures the MPFA disclosed in passing: over the past 12 months, the best-performing individual equity fund returned +98.4%; the worst lost 15.7%. That is a 114.1 percentage point spread. In one system, one member nearly doubled their money in a year while another lost a sixth of it — and the official headline says “average 10.3%”. Here is the problem: there is no “average” fund in the MPF system for you to buy. Every choice you make is a single draw from this distribution — and the card you draw can have nothing to do with the mean.

Through the Numbers: The Average vs the Two Tails

The top tail vs the average. The +98.4% fund beat the “average” by 88.1 percentage points. The MPFA does not name funds, but September’s league tables have already spoiled the answer: the Haitong Korea Fund (Class T) is up 77.42% year-to-date (MPFGo September rankings, via on.cc, 2 Oct 2026) — a year owned by the AI-semiconductor theme. The top of the table was never “stock-picking skill”; it was “picking this year’s theme”.

The bottom tail vs the average. The -15.7% end sits 25.9 points below the mean. Hong Kong and China equity funds are the prime suspects: the BOC-Prudential China Equity Fund is down 10.11% year-to-date, a fixture at the bottom of the rankings. Same system, same contributions — one member rode Korea, another is stuck in Hong Kong. This is not a 10.3% story. It is two parallel universes.

The lazy fund’s report card. The DIS Core Accumulation Fund has annualised 7.1% since its 2017 launch — a full 2 percentage points a year above the equity-fund since-inception average of 5.1%. Doing nothing beat the equity average. Over the past 12 months it returned 9.5%, just 0.8pp below the equity average of 10.3%, while sidestepping the entire 114-point dispersion. With a fee cap of 0.85% (actual average around 0.77%), it flattens the fee dispersion too.

The rolling-window trap. When the MPFA published its year-end release in January 2026, equity funds had returned over 24% for 2025. Nine months later, the same “past 12 months” metric reads 10.3%. The funds did not change; the window did — 2025’s strong final quarter rolled out of the frame, and September’s pullback rolled in. Every “what did the past year earn” headline is a product of the calendar, not a property of the funds. Anyone making decisions off rolling 12-month figures is rolling dice with a calendar.

The Compounding Toll: Dispersion Is Not Watched Once — It Compounds for Thirty Years

Illustrative projections (HK$5,000 monthly contributions):

• The average vs the lazy fund: 10.3% over 30 years grows to roughly HK$10.93 million; the Core Accumulation Fund’s 9.5% reaches about HK$9.37 million. A 0.8pp annual gap becomes HK$1.57 million after 30 years — the price of opting out of the lottery.
• The average vs mixed assets: 10.3% vs 8.5% diverges by about HK$3.19 million over 30 years — 9.3 times the average member balance of HK$343,242 (MPF Ratings, 24 Sep 2026). Pick the wrong category and you are a flat short after three decades.
• One year’s cost of a wrong draw: two members, same system, each holding the average balance of HK$343,242. One draws the top fund, the other the bottom. Twelve months later they are 114.1% x HK$343,242 = roughly HK$391,600 apart — more than a full year of average contributions. A single year can cost a year’s wages.
• The long-run truth: equity funds have annualised 5.1% since the system’s inception; the lazy fund 7.1% since 2017. That 2pp annual gap turns HK$5,000 a month into roughly HK$5.96 million versus HK$4.15 million over 30 years — a HK$1.81 million difference. Time compoundifies dispersion: one wrong draw, thirty years of interest.

The Fix

First, stop asking “what did the average earn” and ask “which card did I draw.” There is no average fund to buy; every fund is a separate bet. When you read a league table, look at the dispersion before the average — look at the worst before the best.

Second, treat the lazy fund as an anti-dispersion bet. The Core Accumulation Fund has annualised 7.1% since 2017 against the equity-fund since-inception 5.1%; its 12-month 9.5% trails the equity average’s 10.3% by just 0.8pp; its fee cap is 0.85% with the actual average near 0.77%. You give up the right to chase +98.4% and buy insurance against -15.7%. And Morningstar’s evidence (covered in this column earlier today) is unambiguous: the hotter the fund, the less of its returns investors actually capture — the top of the table is a tax bill for performance chasers.

Third, do not chase the top. The +98.4% is a rear-view-mirror number; the forward-pricing mechanism (T+1/T+2 unknown-price dealing) guarantees you can never buy at the price you saw. Chasing a theme peak levies a double tax: the theme’s mean reversion, plus your own timing error.

Fourth, use ECA to extract fees from the dispersion. The cost of picking the wrong fund is already large enough without compounding it with fees: the market-average fund expense ratio is 1.36% against the DIS cap of 0.85%. The annual Employee Choice Arrangement is the legal route for moving balances to a low-fee scheme — fees are the only return you can lock in with certainty.

The MPFA attaches the same reminder to every data release: MPF is a 40-year-plus investment; do not try to time the market. Today’s data proves why: when the dispersion is 114 percentage points, timing the market is not a skill — it is a lottery ticket. And there is a cheaper way to play: it is called the lazy fund.