GUM: Top 10 MPF Events in Review in 2022
Annual loss of HK$39,000 recorded, second worst in MPF history
Rebound expected in 2023, pre-requisite to choose the right plan?
30 Dec 2022
To wrap up the upheaved year, GUM summarizes 10 major events of MPF in 2022. Affected by the pandemic, increase in interest rates in the United States, and supply chain imbalances resulting from the Russo-Ukrainian War, this average loss per MPF member of HK$39,000. Due to positive news in the November and December 2022, the cumulative rebound since November 2022 was 11.3%. Members are advised to take into account the investment return over a period of five to ten years, review the performance of their MPF scheme at least once or twice a year, and adjust their investments in accordance with their risk tolerance level.
1. The market fluctuated throughout 2022, with an average loss of HK$39,000
There was a 3.9 point (+1.8%) increase in the GUM MPF Composite Index as of December 23 to 217 points. The three major indexes all performed well in December, and the GUM MPF Equity Fund Index jumped about 10 points (+3.4%), 290 points were reported; the GUM MPF Mixed Asset Fund Index increased by approximately 2 points (+0.6%) to 215 points; the GUM MPF Fixed Income Fund Index increased by approximately 1 point (+0.5%) to 122 points. Since the beginning of 2022, the MPF's average loss per member has narrowed to HK$38,805.
Table 1: Overall MPF Market Performance and Average Gain/Loss Per Member (as of 23 December 2022)
2022 December Return (%)
2022 Return (%)
GUM MPF Composite Index
Average MPF Gain/Loss Per Member Note 1 (HK$)
2022 December Return (%)
2022 Return (%)
GUM MPF Equity Fund Index
GUM MPF Mixed Asset Fund Index
GUM MPF Fixed Income Fund Index
2. Risk off or risk on? HK$4 billion assets could have turned into profits
In the first 11 months of 2022, assets of HK$13.4 billion were switched among the three asset classes. This represented about 1.1% of the total assets of the MPF as at the end of 2021, which represented a decrease from the asset conversion in 2021 of HK$37 billion. The tendency for members to use static braking can be observed when the market is falling.
Figure 1: Fund flows of the three major asset classes (comparison of 2022 and 2021)
According to the asset flow analysis of a single month, most equity funds recorded net inflows when equity funds rebounded. This indicates that some members attempted to capture market trends by allocating funds accordingly. Members might have missed the double-digit rebound in equity funds in November if they had chosen short-term hedging in November. However, approximately HK$4 billion in assets were transferred to fixed income funds before November. GUM recommends that MPF members should avoid over-capturing market opportunities due to risk aversion or profit-seeking and should plan their investments over the long term.
Figure 2: Comparison of the capital flow of the three major asset classes in 2022 and the average return of equity funds in the same period
3. Best scheme of 2022? Only BOC-Prudential and HSBC have outperformed the market among leading MPF providers
During 2022, the performance of MPF fluctuated, and the BCT (MPF) industry plan delivered the highest annual return. Among the top five MPF plans in terms of highest market share in the market, only BOC-Prudential Easy-Choice Mandatory Provident Fund Scheme (with a market share of 7.0%) and HSBC Mandatory Provident Fund - SuperTrust Plus (17.8% market share) have outperformed the market (average return of -15.1%). According to GUM, MPF represent a long-term investment option for retirement. Instead of switching MPF plans based on short-term performance in a single year, members should refer to their average return over the past medium and long term.
Table 2: Comparison of planned returns (2022 and 10-year annualized returns)
Ten-year annualized return: from January 1, 2013 to December 23, 2022
Return of 2022
Annualised return (% p.a.)-10 Year
Times of outperformed the market in the past 10 years
BCT (MPF) Industry Choice
AMTD MPF Scheme
BEA (MPF) Industry Scheme
China Life MPF Master Trust Scheme
BCOM Joyful Retirement MPF Scheme
HSBC Mandatory Provident Fund - SuperTrust Plus
Hang Seng Mandatory Provident Fund - SuperTrust Plus
BOC-Prudential Easy-Choice Mandatory Provident Fund Scheme
Invesco Strategic MPF Scheme
Sun Life MPF Basic Scheme
4. Equity funds fell nearly 20%, and the best and worst were 30% apart
There was a fluctuation in the performance of the MPF in 2022, with a cumulative decline of nearly 18.6% for the entire year. This was followed by a drop of nearly 31.2% in the middle of the year, which was particularly hard on the equity funds. A whopping 31% difference was observed between the best-performing plan yielded -6.0% and the worst-performing plan yielded -37.0%. Among the 8 major equity fund categories, the performance of the same category of funds in different MPF schemes also varies, with the difference reaching 20.3%. GUM believes that members should pay careful attention to the performance of MPF schemes and select funds that are appropriate for their own risk profiles.
Table 3: Comparison of Best and Worst Equity Fund Performance in 2022 (By Equity Fund Category)
5. Return of the “Lazy” DIS Fund varies by 7%, should members be lazy when picking a plan?
The DIS Default Investment Strategy (DIS) Fund, also known as the "Lazy Fund," has a total asset value of HK$83.69 billion as of November 30, 2022, representing approximately 8% of the MPF's total assets. There is an estimated -14.9% return in 2022, slightly above the -15.1% return for the GUM MPF Composite Index. The difference between the best and worst returns of the core accumulation fund plans is approximately 7%; and the difference between the best and worst returns of the post-65 fund is approximately 2%. Members should choose MPF schemes carefully even if they choose default investment instructions, especially those who are young or have a long retirement period.
Table 4: Return Comparison of DIS Default Investment Strategy Funds (By Fund Type)
6. As interest rates rise, should conservative funds return catch up with fixed deposits?
As local bank fixed deposit interest rates gradually rise in line with the US federal funds rate, certain member expected conservative fund to be able to reach the level of bank deposit saving rate, yet member should understand the factual differences and adjust their expectations accordingly. In fact, due to the following three factors, it may not be appropriate to directly compare the two. Some of the conservative funds of the top 5 MPF providers in the market in December also met expectations. If the current interest rate trajectory remains unchanged, GUM perceived a realistic annualized return of 2-3% for 2023.
Instead of a one-off upward adjust in the beginning of the year, Hong Kong bank deposit rates basically follow US Fed Fund Rate and rise gradually. Therefore, MPF conservative fund YTD return can only be benefited from this on a pro-rata basis. As such, using latest Nov return of MPF conservative fund to compare current time deposit rate is more appropriate instead of using YTD return.
MPF conservative fund mainly take reference on prescribe saving rate, which is simple average of the interest rates offered by the three note-issuing banks in Hong Kong on Hong Kong dollar savings account, and not fully mimicking time deposit rate. Therefore, the two cannot be compared on the same basis. Still, conservative funds can also place certain portion in deposit rate.
In general, only new money can benefit from the high deposit saving rate. For now, there are close to HK$ 100billion belong to MPF conservative fund, but there are only close to HK$2.4 billion (Nov data) belong to new money (i.e., new contribution in MPF terms). Therefore, not all MPF conservative fund can benefit from the new money time deposit rate.
Table 5: Top 5 Market Share Service Providers - MPF Conservative Funds Return in December
Top 5 Market Share Service Providers - MPF Conservative Funds
Return in December 2022
Annualised return rate in December 2022
BOCI-Prudential Easy-Choice MPF – BOC-Prudential MPF Conservative Fund
Manulife Global Select (MPF) Scheme – Manulife MPF Conservative Fund
AIA MPF- Prime Value Choice – MPF Conservative Fund
Sun Life Rainbow MPF Scheme – Sun Life MPF Conservative Fund – Class A
HSBC Mandatory Provident Fund – SuperTrust Plus – MPF Conservative Fund
7. Member expectations on MPF are too high to sustain confidence
According to the "Public Opinion Survey 2022 on MPF Management and Confidence" commissioned by GUM, MPF members' confidence in MPF as retirement protection is 2.8 (total score: 10), a significant decrease from last year's 3.6. It is mostly affected by the volatile nature of the market this year, which drags down the return. According to the interviewed members, they expected their MPF return to be 19.0% from over the next 5 to 10 years. Their expected returns are similar based on their MPF investment portfolios.
Table 6: The return expectations of the interviewed members on MPF
MPF Investment Portfolio
MPF overall average expected rate of return per year
High risk group
Medium risk group
Low risk group
In terms of the high risk group, its investment assets are primarily equity funds, and the stock indexes more familiar to members, such as the Hang Seng Index and the S&P 500 Index, have generated annualized returns of 1.2% and 13.0% respectively in the past ten years, with a reasonable annualized return expectation of 5-7%. As for the low-risk group, its investment assets are primarily fixed-income funds, GUM estimates that the expected return for the low-risk group should range between 2-3%.
GUM believes that the expected return of the medium and low risk group greatly deviates from the risk ratio of this asset class, which is the result of two problems: (1) Members may not have a clear understanding of their current MPF investment portfolio, including the asset items they invest in and the relative risk-reward ratio of these investments; (2) Members may lack a clear understanding of MPF investment returns. A majority of respondents (59%) were in the medium and low risk groups, indicating that investing education should continue to be strengthened for members. Members can maintain confidence in MPF as retirement protection by being aware of the risk-reward ratio of their investment portfolios.
8. 60% of members have never spent time checking their MPF during the year
In addition, according to the survey results mentioned above, 32% of members have reviewed their MPF investments for more than 30 minutes in the last year. This is a slight decrease from 36% last year. Approximately 39% of members who invest in high-risk portfolios reviewed their MPF investments. GUM recommends members spend 30 minutes or more every 6 months or every year examining the long-term returns of their MPF schemes, such as a period of 5 or 10 years, and determining whether the asset values are consistent with their retirement plans. Maintain asset ratios, switch funds to risk portfolios, and avoid blind hedging as a result of market fluctuations. This can be done by responding to retirement plan changes or achieving asset ratios on time.
9. eMPF will be launched next year, the first phase of seven plans involving 460,000 members
The MPFA stated that the "eMPF" platform would begin operating in the second quarter of 2023, according to its earlier timetable. It is expected that MPF providers will transfer administrative procedures to the platform according to asset value from low to high in the second quarter of 2023, approximately HK$105.9 billion will be available (covering approximately 34,000 employers^ and 460,000 employees ). Upon implementation of the eMPF platform, the authorities anticipate a 30% reduction in fees for ten years; up to November 30, the fee expense ratio (FER) is 1.33%. Members can save an estimated HK$42 million each year on administration costs. By the end of 2024, the entire transfer process is expected to be completed; the last batch will be those MPF schemes with the highest asset value on the market, and once all MPF schemes have been transferred. Based on asset as at 30 November 2022, all members will save approximately HK$415 million in administrative expenses annually.
^The number of employers in the chart above is calculated by multiplying the number of employers in the MPF report on September 30, 2022 by market share.
The above number is calculated by multiplying the number of MPF members by market share as of December 31, 2021.
10. Abolition of MPF Offsetting Arrangement to be implemented in 2025
The Legislative Council passed the Employment and Retirement Schemes Legislation (Offsetting Arrangement) (Amendment) Bill 2022 for the third reading this year, and it is expected to take effect in 2025 with the full operation of eMPF Platform. Employers will not be able to offset severance payments or long service payments incurred by employees after the effective date of the amendment (i.e., the "conversion date") by their MPF mandatory contribution accrued benefits. In accordance with the MPFA's quarterly report, until September 30, 2022, HK$2.05 billions of MPF benefits will be used to offset long service payments. Another HK$1.38 billion will be used to offset severance payments. In the last three years, from 2019 to 2021, a total of 7.32 billion Hong Kong dollars in mandatory contributions of MPF benefits have been used to offset long-term service payments (approximately 2.44 billion Hong Kong dollars per year on average), and another 7.91 billion Hong Kong dollars have been used to offset termination pay (approximately HK$2.64 billion per year on average). As a result, after abolition of MPF Offsetting Arrangement is completed, each member's retirement protection will be enhanced.
Calculation based on total MPF assets of previous quarters’ end and total MPF Scheme members 4,573,000 as of 31 December 2021. The latest average assets per member was HK$227,726 as of 30 November 2022. GUM MPF Composite Index 2022 December is as of 23 December 2022.
Including industry equity funds, or funds investing in areas not defined in the sub-index.
*The growth of all fund categories indexes is calculated by asset-weighted point-to-point growth. The data for 2022 return is summarized from 1 January to 23 December 2022. The data for December 2022 return is summarized from 1 December to 23 December 2022.