2023 Annual MPF Fund Performance Review
MPF funds finished 2023 on a high note and gained an average of about 3.5% for the year as US inflation appeared to be under control and the FED publicly signaled its intent to lower interest sometime in 2024. Global equity and bond markets rallied as a result despite geopolitical conflicts in Ukraine and the Middle East.
According to MPFA, all 6 of its fund categories recorded a gain in 2023 and mixed asset fund is the best performance category and collectively rose an average of 7.2% for the year. Core accumulation funds under the default investment strategy posted an average annual gain of 14.3%. Conservative funds gained an average of 3.5% as they mainly invested in short-term time deposits.
The following is a snapshot of near, intermediate and long-term performance of some popular MPF fund categories from market-leading MPF providers:
Among equity fund categories, Hong Kong and China equity funds did not participate in the rally of global markets and ended up being the worst performance funds in 2023 as well as in 5 and 10-year terms. Low-fee HK index funds continued to outperform most of the corresponding actively managed funds.
Global equity funds and US equity funds both performed well in 2023 and recovered most of the 2022 losses. Global equity fund category is a good choice for those with a long-term investment horizon due to its diversification in different regions and industry sectors to avoid over-concentration in a specific area/sector.
If you would like further asset diversification by increasing bond allocation, the core accumulation fund category proves to be a great option. It is the more aggressive one of the 2 funds made up of the default investment strategy (DIS) and its intermediate term performance has also been decent. With a 60/40 split in equity/bond asset and a low fund expense ratio of less than 1%, it offers a good balance of risk and return and global diversification.
In the MPF and investment world, we cannot control the return of the funds but we can increase our odds of having higher return by avoiding funds with higher fees to leave more capital to work for us. Some of these global equity funds and all core accumulation funds offer low total expense ratios (less than 1%). Beside fund costs, MPF members can also periodically review and consolidate own portfolio allocations according to the investment objectives, timeframe and risk tolerance levels.
Please contact us if you want more information about the fund choices from various MPF trustees.
Last Update: 18th January 2024