The returns on almost a third of the 550 funds offered by 15 Mandatory Provident Fund providers did not cover inflation in the past year, a Federation of Trade Unions study has found.
The union also found that the returns for 89 per cent of the funds in the past five years were less than the average inflation rate of 3.1 per cent, while, in the past decade, a fifth of funds failed to surpass average inflation of 1.86 per cent.
In the year to July, the fund that generated the highest average return - 42.08 per cent - was an equity fund from MassMutual, while a global bond fund offered by Sun Life performed worst, incurring an average loss of 2.46 per cent.
For 31.42 per cent of MPF funds, the returns to July were less than the inflation rate of 4.2 per cent in the past year, the union found.
"For most Hong Kong people, all they want from their MPF investments is that the returns meet inflation. That's all they want," union lawmaker Bill Tang Ka-piu said.
The MPF is a retirement scheme that covers 2.4 million people in the city.
The union did not have figures on the average return on all 550 funds in the past year, but it quoted the Mandatory Provident Fund Schemes Authority as saying that the average return for all funds since MPF was launched in 2000 was 3.4 per cent.
Tang said that the number of MPF funds in the market had gone up from 288 a decade ago to 550, providing greater choice to the point where people had difficulty deciding on one.
"The number of funds should be capped at 100," he said. "They could be chosen according to the administrative cost or the performance of the funds."
Dr Li Kui-wai, of City University's department of economics and finance, said the returns in the past year did not mean much because MPF investment should be assessed long-term.
He blamed the financial crisis of 2008 for the fact that almost 90 per cent of funds failed to match inflation over five years.
In October last year, the Consumer Council said that nearly half of MPF investments were in the red from 2007 to 2012.