Hong Kong and China equities are the best performing asset class in the first ten months of the year among investment choices in the Mandatory Provident Fund (MPF), the compulsory retirement scheme in Hong Kong, according to pension research provider MPF Ratings.
The MPFR Index of Equity Fund (HK & China), which gauges the performance of 82 registered Hong Kong and China equity MPF fund schemes, recorded a return of 32.48% from January to October, outperforming the benchmark Hang Seng Index’s 28.39% gain over the same period, MPF Ratings says in a monthly report.
In addition, the MPFR Index of Equity Fund (Asia), which tracks the performance of 40 registered Asian equity MPF fund schemes, topped its peers in October with a return of 3.66% for the month. The fund had a return of 30.65% in the January to October period.
However, MPF Ratings points out that “not all members have fully benefited” from the strong performance of Hong Kong and China equity funds.
“Poor fund selection could have resulted in a HK$400,000 (US$51,290) difference in wealth over a decade,” it says in the report released on November 9.
According to MPF Ratings, the monthly difference in returns between the best and worst performing Hong Kong and China equity funds was 1.37%, and that over a ten-year period, this is equivalent to a difference of HK$411,742 based on HK$100,000 invested.
This “significant performance disparity reinforces the importance of fund selection and diversification across more asset classes and the need for MPF investors to remain engaged and aware of their MPF investments,” MPF Ratings Chairman Francis Chung says in the report.
The MPF had an aggregate net asset value of about HK$745.73 billion as at June 2017, according to figures from the Mandatory Provident Fund Schemes Authority, which supervises the MPF industry.
