In the fourth quarter of 2022, a rebound across the board brought some relief for investors, but it was not enough to have changed the outcome for the year from negative to positive. For the full year 2022, Hong Kong workers lost 15.6% on average in their retirement accounts, with all Morningstar categories in the red, except for cash-like HKD money market funds. The worst-performing categories (which lost over 20%) are equity funds that invest in China, Asia, the U.S., and global markets.
The fourth quarter posted the year’s only positive quarterly return of 7.1%, primarily driven by equity funds (which are also the year’s worst performing asset class). Between October and December, equity funds gained 11.3%, narrowing the 12-month loss to slightly under 20%. Allocation and fixed income funds posted single-digit returns for the quarter. Europe equity funds topped the chart for the quarter with a 16% return, followed by Hong Kong equity (14.7%) and China & greater China equity (11.8%). Other risky categories, like aggressive allocation (11.7%) and moderately aggressive allocation (8.9%), were also among the quarter’s winners.
|
Asset Class |
Q4 2022 |
FY 2022 |
|
Allocation |
6.56 |
-16.59 |
|
Equity |
11.26 |
-19.73 |
|
Fixed Income |
2.13 |
-12.30 |
|
Miscellaneous |
1.63 |
-8.92 |
|
Money Market |
0.65 |
-0.65 |
|
Average |
7.10 |
-15.56 |
Cash Products Defend Against a Bear Market
Some cash-like money-market products offered refuge to investors. HKD-denominated money-market funds were the only category that remained in the positive territory in 2022, returning 0.2%. Other top categories are also those that lean towards the conservative allocations, such as other money market, China bond, guaranteed funds, and HKD bond. Even these were unable to avoid an annual loss for 2022, registering a single-digit negative return.
|
Best 5 Categories |
Average Return of 2022 |
|
HK MPF HKD Money Market |
0.21 |
|
HK MPF Other Money Market |
-4.00 |
|
HK MPF China Bond |
-5.53 |
|
HK MPF Guaranteed Funds |
-8.92 |
|
HK MPF HKD Bond |
-9.39 |
Turning to the laggards, the bottom five categories all invest in equities strategy. China & greater China equity funds posted the worst performance in 2022. Data shows that this bear market has been the longest in the short history of the Chinese equity market. After sliding 12.2% in 2021, China equity MPFs plunged another 23.6% on average in 2022.
Investors traded on the piecemeal relaxation measures of the country’s zero-COVID approach during the year and more so towards the end of the year as it reopened its borders in January 2023. The easing of COVID restrictions is a major catalyst for the asset class but volatility could persist.
After posting their best three-year returns in 24 years, in 2022, the U.S. MPFs shed 22% from near record highs. This loss was against a backdrop where decades-high inflation remained much hotter than expected, interest rates surged, and fear of a recession loomed.
|
Worst 5 Categories |
Average Return of 2022 |
|
HK MPF China & Greater China Equity |
-23.55 |
|
HK MPF Asia ex-Japan Equity |
-22.03 |
|
HK MPF US Equity |
-21.98 |
|
HK MPF Asia-Pacific ex-Japan Equity |
-20.81 |
|
HK MPF Global Equity |
-20.62 |
Individual Funds
The top performer goes to BCOM MPF Conservative Fund, which ended the year with a 1.4% return.
|
Top 10 MPFs in 2022 |
Morningstar Category |
Return |
|
BCOM MPF Conservative Fund |
HK MPF HKD Money Market |
1.42 |
|
AIA MPF - PVC MPF Conservative |
HK MPF HKD Money Market |
0.66 |
|
BOC-Pru Easy Choice MPF Conservative |
HK MPF HKD Money Market |
0.55 |
|
Manulife GS MPF Conservative |
HK MPF HKD Money Market |
0.51 |
|
Principal 800 Capital Guar D |
HK MPF Guaranteed Funds |
0.46 |
|
Haitong MPF Conservative - T |
HK MPF HKD Money Market |
0.43 |
|
BEA (IS) MPF Conservative |
HK MPF HKD Money Market |
0.43 |
|
Invesco MPF Conservative H |
HK MPF HKD Money Market |
0.42 |
|
BEA (VS) MPF Conservative |
HK MPF HKD Money Market |
0.42 |
|
Invesco MPF Conservative A |
HK MPF HKD Money Market |
0.42 |
Mass MPF US Equity and Manulife GS MPF N Amer Eq were the worst performers, losing 37% and 31.9% respectively. Manulife’s Europe equity product, which fell 31.1%, ranked the third poorest performing MPF. The list is completed by six China MPFs and a global equity fund.
|
Bottom 10 MPFs in 2022 |
Morningstar Category |
Return |
|
Mass MPF US Equity |
HK MPF US Equity |
-36.96 |
|
Manulife GS MPF N Amer Eq |
HK MPF US Equity |
-31.94 |
|
Manulife GS MPF Euro Eq |
HK MPF Europe Equity |
-31.12 |
|
Mass MPF Greater China Equity |
HK MPF China & Greater China Equity |
-29.01 |
|
Principal Smart Plan-Dynamic GrterCHN Eq |
HK MPF China & Greater China Equity |
-28.64 |
|
My Choice China Equity |
HK MPF China & Greater China Equity |
-28.63 |
|
Manulife GS MPF Intl Eq |
HK MPF Global Equity |
-28.29 |
|
Sun Life MPF Greater China Eq A |
HK MPF China & Greater China Equity |
-27.83 |
|
Manulife GS MPF China Value |
HK MPF China & Greater China Equity |
-27.77 |
|
Sun Life MPF Greater China Eq B |
HK MPF China & Greater China Equity |
-27.68 |
MPF commentary for the past quarters:
- Q3 2022
- Q2 2022
- Q1 2022
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