The Mandatory Provident Fund (MPF), Hong Kong’s compulsory pension scheme, reported a 2.47% return in the first quarter of 2024, equivalent to an investment gain of HK$28.5 billion, or HK$6,000 for each of its 4.7 million members.
That brings the rolling one-year investment gains to HK$23.2 billion, or HK$4,800 per member, and puts the MPF on track to generate HK$100 billion for the whole year, according to independent research provider MPF Ratings.
Japan equities produced the best performance, reporting a quarterly return of 12.30% and a one-year return of 30.48%, followed by US equities, which delivered a quarterly gain of 9.82% and a one-year return of 28.39%.
Hong Kong and China equity funds were the worst performers, reporting a quarterly loss of -2.4% and a one-year rolling loss of -18.01%.
Francis Chung, chairman of MPF Ratings, says the scheme’s Q1 2024 return would be its eighth best-ever quarterly start, contributing to a first positive financial year MPF return in three years. After factoring in contributions, MPF total assets would end the quarter at HK$1.18 trillion, equivalent to an average account balance of HK$248,700.
“Global inflation and interest rates will determine 2024’s direction but with most MPF money invested in Hong Kong and China equities, local market performance will still be key,” Chung says.
“While it’s tempting to chase strong returns seen in markets such as Japan and the US, market volatility resulting from conflicting economic indicators reinforces the importance of diversified investing. The use of DIS (default investment strategy) funds continues to be MPF Ratings’ preferred 2024 investment approach.”
The Mandatory Provident Fund Schemes Authority reiterates that the MPF is a long-term investment scheme.
“Members should not adopt a short-term investment approach in managing MPF and try to time the market,” a spokesperson says. “MPF is designed to help scheme members build up their egg nest and benefit from dollar-cost averaging through making fixed amounts of MPF contribution on a regular basis and invest in accordance with personal needs in different life stages.”
