The Mandatory Provident Fund Schemes Authority (MPFA) of Hong Kong has released performance data. From the inception of the MPF system until the end of June this year, equity funds have achieved an average annualized net return of 5.1%, while mixed asset funds have returned 4.8%. Both categories have outperformed the corresponding period's annualized inflation rate of 1.8%. Together, these fund types constitute 81% of total MPF assets.
The Core Accumulation Fund, part of the Default Investment Strategy (DIS) often referred to as the "set-and-forget fund," has delivered an average annualized net return of 7.3% since its launch in 2017. Its highest annual return was 11.2%, and its lowest was 7%. This performance also surpasses the 1.8% annualized inflation rate recorded since the MPF's establishment.
The MPFA reminds MPF scheme members that the MPF is a long-term investment spanning over 40 years. It should not be viewed from a short-term trading perspective, and members should avoid trying to time the market to prevent buying high and selling low, which can negatively impact investment returns.
The authority further notes that with the full operation of the "eMPF" platform since late April, all scheme members can now use it as a one-stop service to review their overall MPF investment performance and account status. The MPFA encourages members to register for "eMPF" early to cultivate the good habit of regularly checking personal MPF information and managing their investments.
The MPFA advises that when members periodically review their MPF investments, they should formulate a suitable investment strategy based on personal factors such as life stage, financial situation, and risk tolerance. They should also clearly consider their investment goals, the risk level of individual funds, the fund expense ratio, and performance across different periods to make appropriate investment decisions.
For members who lack the time or investment knowledge to manage their MPF, utilizing the DIS is recommended. It provides a ready-made investment solution that diversifies across global equity and bond markets. It features an automatic de-risking mechanism that adjusts the portfolio as the member ages to help reduce investment risk. Funds under the DIS also have a fee cap set at 0.85% of the net asset value.
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