A strong stock market gave a boost to employees' pension investments with an average return of 19.21 per cent last year, marking the first profitable year since the Mandatory Provident Fund (MPF) was introduced in 2000. Pension providers said the impressive performance of the retirement scheme was mainly the result of strong stock markets, while the good returns encouraged employees to voluntarily contribute more money to their pension accounts than required. More employees are also opting to put their pension contributions into funds focusing on stock investments. Last year's profit follows average losses of 6.39 per cent in 2002 and 0.33 per cent in 2001, according to Standard & Poor's. Total assets managed under the MPF reached $84.8 billion at the end of November last year, with an average $2 billion of new money coming in every month. Equity funds were the best performer last year, with an average 35.41 per cent return compared with a loss of 17.21 per cent in 2002. Hong Kong equity funds averaged a return of 43.36 per cent. Balanced funds, which invest in stocks and bonds, had an average return of 22.11 per cent, compared with a loss of 8.11 per cent previously. The poorly performing money market funds and bond funds only represented 1 per cent each of all MPF investments. Money market funds, which invest in bank time deposits, were the worst performers with a return of 0.13 per cent, compared with 0.39 per cent in 2002. Bond funds reported a return of 6.06 per cent, down from 7.52 per cent in the previous year. Hong Kong Investment Fund Association executive director Sally Wong said the scheme had benefited from the stock market rally. 'After three consecutive years of negative returns, the global equity markets have staged a turnaround since last March. Last year, Asian equity markets went up by 30 to 40 per cent while the US and European funds grew about 20 to 30 per cent,' Ms Wong said. 'The performance of money market and capital preservation products paled by comparison. Due to the historic low interest rates, these sectors, which primarily invest in money market instruments and short-term bonds, registered nil or very marginal gains in the period.' Launched in December 2000, the MPF is the first compulsory retirement scheme in Hong Kong that requires the city's 200,000 employers and two million employees to each pay a percentage of their monthly salary into a pension plan. Employees can decide how much they want to allocate to various investment funds under the MPF schemes. HSBC Insurance (Asia Pacific) Holdings chief executive Choy Chung-fu said last year's strong performance led employees to put more money into the fund. HSBC is Hong Kong's largest pension provider with a market share about 30 per cent. 'When employees learn they can get a good return on their pension investment, they are willing to put in more money than required by law,' Mr Choy said.