Stephen Fung Yu-kay, chief executive of AIA MPF, said the American Fund invests in a combination of North and South American equity market index-tracking funds.

“Its leading performance in 2016 among the overall MPF funds offered was largely attributed to the overall performance of the North American and South American equity markets,” Fung told the South China Morning Post.

The S&P 500 index has gained 11.96 per cent last year while the S&P Latin America 40 Index grew 32.54 per cent, beating the Hang Seng Index which rose only 0.4 per cent last year.

Hong Kong’s Mandatory Provident Fund had a tough ride last year as global stock markets faced various so-called “black swan” events including the China circuit breaker debacle, Brexit, and Donald’s Trump’s victory in the US presidential election.

But the US and South American stock markets remained strong.

Despite their performance last year, however, Fung said he was yet to see many employees shift to invest in the AIA American Fund, which had assets under management of HK$408.43 million at the end of November.

And despite its strong performance, Fung still warned investors to pay attention to the fund’s high volatilities.

“It is worth pointing out that over the past few years the return of the South American equity market indices has been particularly volatile, which also affected the performance of funds investing in these markets,” Fung said.

Before its performance last year, the S&P Latin America 40 index suffered losses in the three previous years to 2015, when it fell 31.15 per cent in value.

The Lipper figures also showed some of the MPF’s top performers haven’t been doing so well of late.

The biggest loser last year was a Haitong Korean equity fund which fell 12.53 per cent, which was 2015’s best MPF performer, with a return of 21.56 per cent.

The other top performers also invested heavily in US equities including HSBC and Hang Seng Bank with their own US equities funds ranking second and fifth while AIA also had two other MPF funds ranked among in the top ten, which were also invested in US equity markets.

Fung said one lesson to be learned from the latest performances is that MPF employees should try and spread their interests away from home-based funds.

“The MPF system is characterised by a relatively high exposure to Hong Kong in particular, showing a home-bias tendency among members. This can decrease odds for investment success,” Fung said.

According to government statistics, 60 per cent of the MPF’s assets are invested in the Hong Kong market, 14 per cent in North America, 11 per cent in Europe, 9 per cent in Asia and 5 per cent in Japan.

“Investment diversification helps to minimise risk and capture investment opportunities,” Fung said.

“As there is no way of telling how one asset or particular market will perform, members should not put all their hard-earned money into just one asset class or a single market.”

Fung also said MPF employees should review their mix of MPF investments regularly.

“In general, it is good to review fund choices once every six months to a year, and consider making adjustments if necessary,” Fung said.

“If members enter a new stage in the life, such as purchasing a property, getting married or having children, they should consider reviewing their existing fund choices because their risk tolerance level may change,” he added.

Louis Tse Ming Kwong, a director at VC Brokerage, said investors need to be cautious.

“The US market has been rising for quiet some time and the Dow Jones hit 20,000 for the first time in history in January,” Tse said.

“There is always the chance of market correction. The US market was good last year, but this doesn’t mean it will have sustained strong growth this year.”