The performance of the Mandatory Provident Fund scheme will be extremely volatile in 2020 and may be dragged down by uncertainty in the local and global economy, as well as the spread of the novel coronavirus, the Mandatory Provident Fund Schemes Authority (MPFA) warned.
The MPF system’s total asset value size and net investment returns have managed to rally in 2019, a turbulent year that saw China and the United States locked in trade disputes and months of social unrest in Hong Kong.
MPF still harvests positive investment returns against the backdrop of the lingering China-United States trade frictions, Brexit and social unrest in Hong Kong, reflecting the robustness and the continued growth of the MPF assets
Cheng Yan-chee, MPFA chief corporate affairs officer and executive director
At end-December last year, the aggregate net asset values of all MPF schemes amounted to HK$969.5 billion (US$124.2 billion), representing a 19.2 percent increase from a year ago, MPFA figures revealed.
In the same period, the MPF system’s investment return rate reached 12.2 percent after netting out fees and charges. The annual internal rate of return of MPF system since its implementation on Dec 1, 2000 was 4.1 percent, exceeding the city’s overall inflation rate during the same period.
“MPF still harvests positive investment returns against the backdrop of the lingering China-United States trade frictions, Brexit and social unrest in Hong Kong, reflecting the robustness and the continued growth of the MPF assets,” Cheng Yan-chee, MPFA chief corporate affairs officer and executive director, told a Tuesday press conference.
Cheng reported the positive return of each kind of MPF funds in 2019, where equity funds rose 16.7 percent and mixed assets funds gained 14.7 percent.
MPFA introduced two default investment funds in April 2017 for providing low-cost investment fund options for 4.36 million MPF members. As at last year, the cumulative return rate of Core Accumulation Fund and Age 65 Plus Fund since their launch was 20 percent and 12 percent, respectively.
“Although MPF fund returns turned red in January due to the spread of the novel coronavirus, MPF fund performance nevertheless rebounded into positive territory as at Feb 20 buoyed by countercyclical measures launched by global central banks. MPF members should not over worry too much and frequently change their MPF fund portfolios due to short-term market fluctuations,” Billy Wong, MPF advisory firm Gain Miles Group executive director, noted.
At end-December last year, there were 15 approved trustees, 30 registered schemes with 441 approved constituent funds and 311 approved pooled investment funds under the MPF system, MPFA data shows.
There were 3.86 million people in the Hong Kong workforce during last year’s third quarter, according to Census and Statistics Department data, and 74 percent of them have joined MPF schemes.
