Hong Kong’s MPF up 5.02pc in first nine months, on track for best full year gain in three years

Hong Kong’s Mandatory Provident Fund saw gains for the fourth consecutive month in September, bringing total returns for the first nine months of the year to 5.02 per cent, putting it on track for the best annual performance in three years, according to data from Thomson Reuters Lipper, which tracks the monthly performance of 435 MPF investment funds.

The returns were boosted by a better stock market performance in September, driven by the US decision not to increase interest rates at that time and expectations of the launch of the Shenzhen-Hong Kong Stock Connect in November.

The MPF funds tracked had an average return of 1.17 per cent in September, short of the 1.46 per cent in August and 2.95 per cent in July but higher than the 0.13 per cent increase in June. The gains of the past four months have offset losses from earlier this year which were due to sharp falls in the mainland and Hong Kong stock markets.

The MPF is now on track to have its best full year result in three years, after a decline of 2.95 per cent last year and a modest return of 1.55 per cent in 2014. However, it still has room to catch up to the 8 per cent return seen in 2013.

Equity funds, which are the most popular fund choices in Hong Kong, did well in both September and for the first nine months this year.

Hong Kong equity funds were the best performers in September, posting a return of 3.27 per cent, followed by Greater China equity funds at 3.24 per cent, and Japan equity funds at 2.63 per cent, according to Thomson Reuters Lipper.

For the first nine months, the best overall performers were Asia Pacific (excluding Japan) equity funds with 12.28 per cent growth, followed by Greater China equity funds at 9.46 per cent, other equity funds at 9.30 per cent and Hong Kong equity funds ranking fourth with 9 per cent.

Mixed asset funds, which invest in both equities and bonds and are the second most popular fund choice, had a return of 1.56 per cent in September and a return of 5.73 per cent for the nine month period.

The poorest performance was from health care equity funds which lost 0.89 per cent in September.

About 41 per cent of the HK$600 billion under the MPF is invested in equity funds, while 38 per cent is in mixed-asset funds. The remainder of the money was allocated to bond funds, conservative funds, guarantee funds and money market funds, according to data from the Mandatory Provident Fund Schemes Authority, which oversees the scheme