Standard & Poor's

MPF tipped to sustain 4.5pc yield amid better outlook

PUBLISHED : Tuesday, 25 April, 2006, 12:00am
UPDATED : Tuesday, 25 April, 2006, 12:00am

The Mandatory Provident Fund delivered an average return of 4.52 per cent in the first quarter of this year and should sustain that yield level this quarter amid an improved investment environment, according to pension experts.

The average accumulated return since the introduction of MPF in 2001 is 20.93 per cent.

The positive first-quarter performance was driven by a strong showing in global equity markets, a Standard & Poor's Fund Services survey showed.

Equity funds included in the MPF Scheme achieved an 8.54 per cent average performance in the first quarter, and 33 per cent since the inception of the scheme.

However, the fixed-income sector posted a slight loss during the period, with an average return of negative 0.1 per cent, and 17.83 per cent since the scheme started.

Rex Au Yeung Pak-kuen, Principal International's Asia senior vice-president and chief executive, expects the return on fixed-income investment to improve.

'It [the return] will be stable or become positive as the interest-rate rise cycle will peak soon,' he said. He said also that positive investment sentiment in the global stock markets - especially Hong Kong - would linger.

International indices rose between 5 per cent and 12 per cent in the first quarter, while the Hang Seng Index gained 6.2 per cent.

Cynthia Case, director of fund services at Standard & Poor's, said the key to MPF investment remained constructing a portfolio that best fitted objectives and risk tolerance.