Fidelity MPF: US Equities to Lead Global Markets in 2015

 

  • The US, Greater China and Asia ex Japan equity funds categories all recorded gains, posting returns of 9.61%, 6.43% and 5.03% respectively.
  • In 2015, US equity is expected to continue their bullish momentum and lead the global markets.
  • MPF scheme members should review their portfolios regularly and rebalance their portfolios at different life stages.

 

Hong Kong, 7 January 2015: The average MPF rate of return for the year 2014 was 1.47%1, with US equity funds in the lead. Greater China and Asia ex Japan equity funds ranked second and third respectively. With the impact of currency depreciation, the European equity and Japan equity funds were the two main categories with negative return rates.

 

The US and Greater China equity funds recorded positive return of 9.61% and 6.43% respectively, followed by the Asia ex Japan equity funds with a growth of 5.03% in 2014. Ranking last amongst all MPF categories were the European equity funds with a return of -5.43%, while the Japan equity funds followed with a return rate of -5.21%. Despite concerns the US would end QE, bond funds remained vital. Hong Kong dollar and Asian bond funds recorded increases of 3.21% and 2.44% respectively, topping the average rate; and most of the lifestyle funds recorded stable returns.

 

Charlotte Chan, Investment Director of HK Institutional Business, Fidelity Worldwide Investment, pointed out, “With the S&P 500 surging and breaking records repeatedly in 2014, US equity funds have excelled amongst MPF fund categories. In 2015, a bull market is expected for the US under its loose monetary policy. While the US Federal Reserve may start hiking rates this year, with a benign inflationary environment, rate increases may take a gradual pace. Overall, we hold a positive view towards the US stock market.”

 

“If MPF scheme members have both adequate understanding of investing and the time to study the markets, they may want to make tactical adjustments according to the market trends.” Chan added, “But they should also be aware that MPF is a long-term financial preparation tool for retirement. Therefore, when allocating assets, they must take into consideration their retirement goal, financial situation and risk tolerance level, instead of changing their overall asset allocation based on the short-term market conditions.”

 

Over the past ten years (from June 2004 to June 2014), the proportion of equity funds in the MPF scheme members’ portfolios has risen2 from 51% to 67%, while the proportion of the relatively low-risk fund types (i.e. bond fund, conservative fund and money market fund) has declined from 49% to 33%.

 

“As far as asset allocation is concerned, the proportion of equity funds has been rising for the past ten years. If this is related to the relatively higher growth of stocks during the past ten years, scheme members should review their current portfolio asset allocation and see whether they match their investment goals and risk levels. Our risk tolerance changes in different stages in our lives, scheme members should review their portfolios and adjust their asset allocation accordingly,” Chan reminded.

 

Looking at the increase of equity funds in the overall portfolio, the proportion in Hong Kong and Asia equity funds during the period has also increased substantially from 54% to 69% and 8% to 14% respectively. The proportion invested in the developed markets dropped significantly, with the proportion in US equity down from 11% to 7% and Europe from 24% to 9%.

 

“Home bias is a common behavior for investors. This is no exception for MPF investment. Members largely invest in Hong Kong and Asia markets because this is where they are based. We see the trend going up and therefore concentration risk is heightening. Members should diversify risk when allocating their MPF portfolio, as well as capturing market opportunities in global market.”

 

-ENDS-

 

Notes:

  1. Source of all the above 2014 MPF fund performance data: Morningstar
  2. Source of all the above overall MPF asset allocation data: Mandatory Provident Fund Schemes Authority

 

Notes to editors:

About Fidelity Worldwide Investment
Fidelity Worldwide Investment is an asset manager serving retail, wholesale and institutional investors in 25 countries globally outside North America. With USD $276 billion assets under management (AuM), we are one of the world's largest providers of active investment strategies and retirement solutions. Our 6,900 employees serve millions of retail clients and intermediaries such as banks, financial advisers, and insurance companies. Our more than 450 institutional clients include pension funds, life insurers, endowment funds, family offices, and sovereign wealth funds. Around 850 companies trust us with investing or administering their employees' pension assets. Investment is our only business: We have no competing financial services activities, and are focused entirely on enabling our clients to achieve their financial goals through outstanding investment solutions and service. Open-ended mutual funds, which provide investors with liquid access to all major asset classes, are the main products of Fidelity Worldwide Investment. For institutional clients we offer segregated mandates, as well as component or multi-asset solutions, and manager selection. Investors in a number of countries can also access funds of other managers through our open-architecture platforms, which currently hold USD $81 billion (AuA) of third party investment products. (Data as at 30 September 2014)

 

Media Contact:
Kate Cheung
Corporate Communications, Senior Manager
Tel: +852 2629 2641
Email: kate.cheung@fil.com