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MPF returns expected to be better this year

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The Mandatory Provident Fund (MPF) is likely to have better investment returns this year after performing poorly for the past two years, according to managers and pension experts.

Edith Ngan Man-ling, chief executive of the Hong Kong operation of Invesco Asia, said employees could try to put more of their new MPF contributions into equities funds.

Although these were the poorest performers among all MPF funds last year, they are likely to bottom out. The equities funds recorded an average loss of about 15 per cent last year, while the worst one recorded losses of more than 20 per cent.

This was due mainly to volatile markets worldwide as a result of the poor global economy.

She said a potential war between the United States and Iraq could cloud the stock markets in the first quarter, but the second half would be the time for better returns.

'Even if a war lasted some time, the market should be able to bounce back as investors should have already digested all the bad news at that time,' she said. 'We believe the equity markets would have a single digit growth in average for the whole year.'

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