MPF reports disappointing returns in contrast to strong rally of Hang Seng Index

The Mandatory Provident Fund reported a return of 1.3 per cent for last month, a dismal performance compared with the Hang Seng Index and given the rising inflation in the city.

Last month's returns by the 447 investment funds under the MPF also happened to be lower than the 4.57 per cent average for the past three months and 6.04 per cent for the past six months, said data provider Lipper.

Not only did the fund managers fare poorly compared with the Hang Seng Index, which rose 6.8 per cent last month, it was doubly disappointing for the 2.4 million employees who contribute to the MPF as the returns could not even beat inflation.

In the first half, inflation stood at 3.4 per cent. The government expects full-year inflation to reach 4.6 per cent.

The nine MPF funds invested in mainland equities put in the best performance of all categories, reporting a return of 7.72 per cent. They were the only funds that beat the Hang Seng Index and matched the H-share index, which turned in an outstanding performance with a 7.7 per cent gain.