Breaking news: MPF performance shock

20 March 2020

MPF headed for worst quarterly performance ever

Independent Mandatory Provident Fund (MPF) research group, MPF Ratings has warned MPF members to brace for some of the worst quarterly losses ever recorded, exceeding losses seen during the internet bubble, Black Monday, and the Global Financial Crisis (GFC). (Chart 1)

Chart 1: 3 worst quarters of MPFR Index – Equity Fund (Global)

Source: MPF Ratings

MPF Ratings, through their MPF Performance Survey, tracks the performance of all MPF Constituent Funds, and with the unprecedented volatility recently seen in global equity markets, MPF Ratings’ analysts say their MPFR Index of Equity Fund (Global) is on track to record the worst three months ever.

“Global equity markets are on track to possibly fall 25% in March (Chart 2). If this occurs then global investments within MPF may record some of the worst quarterly performances on record. This astonishing decline in global equities is comparable to the GFC, and while CoVid-19 is not financial, the comparison is more instructive than might be immediately apparent,” referenced Francis Chung (叢川普), Chairman of MPF Ratings, before adding, “In short, during the GFC, markets suffered very significant falls, but today, markets are well above those levels.  As a result, we urge MPF members not to let difficult experiences in the immediate past cloud their judgment.”

Chart 2: Month-to-Date Performance of MSCI World Index in March 2020

Source: MPF Ratings

When asked if markets were near the bottom, Mr Chung counseled, “The recent downward moves in markets may take us substantially closer to a turning point, but calling the bottom will be very difficult. For this reason it is imperative that MPF members ensure their portfolios are well diversified and they focus truly on the long term, rather than attempt to time markets.”