The Mandatory Provident Fund, covering 2.5 million employees in the city, returned to profit in April after recording two consecutive months of losses.
Analysts attributed it to the recent worldwide stock market rally and predicted retirement funds would deliver stable returns in the coming months as many countries around the globe adopt loose monetary policies to boost their economies.
The 458 investment funds under the retirement scheme reported an average gain of 1.9 per cent last month from the previous month, after an average loss of 0.24 per cent in March and 0.58 per cent in February, according to data provider Lipper.
For the first four months of this year, retirement funds have returned 3.59 per cent on average, beating the Hang Seng Index, which edged up 0.35 per cent in the same period.
But the performance still fades in comparison with the strong gains averaging 12.07 per cent last year, which in turn came after average losses of 8.42 per cent in 2011.
The nine Japan equity funds continued to be the best performers last month with an average return of 10.03 per cent, after a 5.85 per cent gain in March.
In the first four months of the year, Japan equity funds were the biggest winners with an average return of 23.57 per cent. They, however, fared worse than Japan's Nikkei index, which rose 33 per cent in the same period.
The worst performer last month was the sole Korean equity fund, the only type of fund to record a loss, of 1.95 per cent. It was also the worst performer over the first four months, losing 4.31 per cent.
The second-worst performers were the nine MPF China equity funds that lost 3.22 per cent on average in the first four months. They returned to the black last month with an average gain of 0.95 per cent.
Other popular fund choices ended up in positive territory. The 61 global equity funds saw an average 2.88 per cent return last month while 41 mixed-asset funds that invest in a mixture of bonds and equity saw an average return of 2.27 per cent.
Ben Kwong Man-bun, chief operating officer of KGI Asia, said Japan's monetary easing policy and a weakening yen helped boost exports and tourism.
"Wherever there is a monetary easing policy, investors are more confident of the economic outlook of that country. That explains why Japanese stocks have become investors' darling this year, " Kwong said.
The performance of China equity funds is in keeping with the poor showing of the Hong Kong and mainland stock markets as a result of the tighter monetary policy adopted by Beijing, he said.
Looking ahead, Kwong said the MPF is likely to provide stable returns in the coming months. "Many governments the world over, such as Japan, the US and in Europe, have all adopted monetary easing policies to pump up their economies. That has provided the stock markets with liquidity, which in turn would benefit MPF performance."
Kwong said investors should not rush to switch their fund choices despite the huge variance in performance of equity funds in different markets.
"Employees should take a long-term view in choosing their MPF funds because it's for their retirement needs. The China equity fund, for example, may not perform well now but in the longer term, the mainland's economic outlook is bright and could beat many other markets," Kwong said.