Hong Kong, 6 July 2015: MPF average returns rose in the first half of 2015 led by double-digit gains in Hong Kong, Greater China and Japan equity funds. The robust growth reflects a rebound in economic activity and accommodative monetary policy from the region’s major central banks, despite recent volatility. Bond funds moved to negative territory for the first time since 2013.
The average MPF rate of return recorded in the first half of 2015 rose to 4.41%, adding to the 1.47% average gain for 2014. All major equity markets posted gains in this period.
Supported by the Bank of Japan’s accommodative policy and improvements in consumer sentiment and economic activity, Japan equity funds led with strong returns of 13.37%. Hong Kong equity, Hong Kong equity (index tracking) and Greater China equities also posted double digit returns of 12.56%, 12.27% and 12.16% respectively as China implemented monetary easing measures.
Ranking last amongst all MPF categories were global bond funds. A spike in yields from mid-April to early May affected the global bond market, resulting in a -2.55% return for the first half of 2015.
Charlotte Chan, Investment Director, Hong Kong Institutional Business, Fidelity Worldwide Investment pointed out, “Volatility picked up especially in the Hong Kong equity market. The Hang Seng Index experienced a daily movement of more than 2% for more than 10%3 of trading days in the second quarter of the year.
“This volatile trend was not seen in the global market. Only 1.5% of trading days for global equity markets in the second quarter of the year experienced movements of more than 2%. Diversification is key to navigating volatile market conditions. As a result of market divergence, performance can vary within a single asset class and across global markets. Scheme members can capture growth opportunities and spread their risk by adopting a diversified approach and allocating assets across asset classes and regions.”
“MPF scheme members may have been tempted to switch to the Hong Kong equity market during the bullish run this year. But if they had done so and failed to participate in the three best performing days, returns for the first half of the year could have fallen from 13.7% to just 3.7%.” Chan added, “MPF is a long term financial preparation tool for retirement. Timing the markets based on short term market sentiment and neglecting your own financial goals and risk tolerance level is not recommended.”
“Looking ahead, the growth outlook is positive for the second half of 2015. Easing monetary policies and low commodity prices should energise global markets and stimulate economic activity. The recovery in the US will be accelerated by higher consumption and wage inflation. In the coming months, markets will be closely watching the timeline of rate normalisation. Global growth is expected to start to look more synchronised. The debt situation in Greece and Ukraine-Russian relations will continue to be sources of disruption,” Chan says.
- Source of all the above 2015 1H and 2014 MPF fund performance data: Morningstar (as of 5 July 2015), MPF categories as defined by Morningstar.
- All Hong Kong equity market data refers to Hang Seng Index, Source: Thomson Reuters Datastream (as of 3 July 2015).
About Fidelity Worldwide Investment
Fidelity Worldwide Investment is an asset manager serving investors in 25 countries across Asia-Pacific, Europe, and Latin America. With USD $285 billion assets under management (AuM) and around 7,000 employees, we are one of the world's largest providers of investment strategies across asset classes, and retirement solutions. Investment is our only business, and our mission is to enable our clients to achieve their financial goals through outstanding investment solutions and service. (Data as at 31 March 2015)
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