Mandatory Provident Fund (MPF) portfolios in Hong Kong posted an average return of 3.75% in April, according to data from Lipper.

Equity funds posted an average return of 7.20%, outperforming all other types of funds and posting their highest average return since September 2007.

Funds that invest in China, Hong Kong, and Greater China shares were the top three performers, posting an average return of 15%, 10.82%, and 8.80%, respectively. These equity funds were bolstered by the Chinese governmentÆs unexpected new measures to reduce the stamp duty on equity trading from 0.3% to 0.1% and speculation of further government actions to support the equity markets on the mainland.

Bond funds posted an average loss of 1.63% and were the only asset class that produced a loss for the month. Mixed-asset funds posted an average return of 2.51%, with mixed-asset Hong Kong dollar aggressive funds outperforming the asset class with an average return of 4.19%.

Several fundamental parameters such as the US housing market, unemployment rate, wage growth, and food and natural resource prices suggest that the global investment climate remains challenging, says Eric Wong, head of Hong Kong research at Lipper.

Investors must remain vigilant and should avoid overweighting their portfolios in high-volatility assets until these fundamental parameters have consistently improved, he notes.

Hong Kong established the MPF in December 2000. Monthly mandatory contributions from workers and employers are capped at HK$1,000 each.

Average April performance of MPF portfolios, by asset type:

Equity +7.20%
Mixed Assets +2.51%
Guaranteed +0.97%
Money Market +0.07%
Bond -1.63%

Top five MPF equity funds in April:

ING MPF M T Bas S-HK Equity +17.38%
ING MPF M T Compre S-HK Equity +17.34%
Principal MPF 800-China Equity +15.53%
BOC-Prudential Easy-Choice MPF S-China Equity +14.46%
BCOM Joyful Hong Kong Dynamic Equity Fund +13.90%