Hong Kong’s Mandatory Provident Fund incurred a HK$32.2 billion (US$4.12 billion) investment loss in the third quarter, including HK$27.8 billion in September, its fifth consecutive monthly loss, according to pension advisory firm MPF Ratings.
The third-quarter loss wiped out the retirement fund’s investment gain for the year to date into a HK$33 million loss as of September, MPF Ratings says in a statement on September 22.
Hong Kong and China equity funds invested in by MPF funds were the worst performers among all its asset classes with a 7.6% investment loss in the first nine months of the year, in sharp contrast to a 23.2% investment gain for US equity funds.
“The market dispersion led to a significant share of MPF’s net inflows into US equities funds this year at the expense of Hong Kong and Chinese equities funds,” MPF Ratings says.
According to MPF Ratings Chairman Francis Chung, fund flows are a gauge of where MPF members feel are the best places to invest.
“Money movement between local and the US equities has become an investment sentiment bell-weather within the MPF system,” he says in the statement, noting that this highlights the difficulties between choosing the best performing asset class assets, and the importance of diversifying investments.
He believes that the MPF’s two default investment strategy funds are the best vehicle for members of the retirement fund to achieve long-term investment and diversification objectives.
Contributions of MPF members who do not provide investment instructions are automatically channelled into the DIS funds.
The MPF had around HK$1.09 trillion of total assets as of September 2023.