Hong Kong’s MPF reports 1.26 per cent gain in 2016

Hong Kong’s Mandatory Provident Fund generated average gains of 1.26 per cent in 2016, beating the benchmark Hang Seng Index and bank deposit rates, according to data from Thomson Reuters Lipper.

The return represents a turnaround from the previous year’s 3.1 per cent loss and is better than the Hang Seng’s 0.4 per cent gain and the local bank deposit rate, which is close to zero.

However, it falls short of the gains seen in 2012, 2013 and 2014, which were 12.43 per cent, 8 per cent and 1.68 per cent respectively, according to Thomson Reuters.

Rex Auyeung, the president for Asia at Principal Financial Group, a leading MPF provider in the city, said the overall return last year was reasonable in light of the volatility in markets resulting from surprise events such as the Brexit vote, the devaluation of the yuan and Donald Trump’s success in the US presidential election.

“While it is not a return that one would jump up and down to celebrate, it is a reasonable return in view of many events we witnessed,” Auyeung said.

The compulsory retirement pension scheme covers Hong Kong’s 2.8 million employees and self-employed workers, and has 435 investment funds which invest in stocks, bonds, and currency according to the employees’ choices.

The biggest loser of 2016 was a Korean equity fund which fell 12.53 per cent despite the South Korean benchmarket Kospi index advancing 3.32 per cent last year. The same fund was 2015’s best MPF performer with a return of 21.56 per cent.