Mandatory Provident Funds (MPF) in Hong Kong posted an average return of 4.49% in October, up from an average gain of 5.39% in September, according to data from Lipper.

Equity funds posted an average return of 7.10%, outperforming all other types of funds in October, just as they did in the previous month.

Among equity funds, portfolios that invested in Asia ex-Japan outperformed those that invested in Europe and the US. Equities funds that focus on Asia-Pacific, South Korea, China, and Hong Kong posted average returns of 17.23%, 16.49%, and 12.57%, respectively.

South Korea shares were boosted by reports of a strong domestic economy and favourable third quarter corporate earnings. Hong Kong shares were driven by abundant liquidity, although that market appears to have stalled due to concerns over in mainland China, particularly concerns over the increase in the reserve requirement ratio of banks and speculation that new measures to cool off the Chinese economy would be introduced.

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

Average October performance of MPF portfolios, by asset types:

Equity +7.10%
Mixed Assets +4.38%
Guaranteed +1.55%
Bond +1.24%
Money Market +0.32%

Top five MPF equity funds in October, with gain:

Taifook MPF Retirement Fd-Korea +20.92%
Taifook MPF retirement Fd-Asia Pacific +17.23%
Principal MPF 800-China Equity +16.49%
ING MPF T Compre S-HK Equity +16.19%
ING MPF M T Bas S-HK Equity +16.16%

Bottom five MPF equity funds in October, with loss:

Mass MPF Scheme Japan Equity -2.28%
BEA MPF Japan Growth Fund -1.50%
AIA-JF MPF Scheme Japan Equity -0.93%
AIA-JF Premium MPF Japan Equity -0.86%
Manulife Glo Select MPF S-Japan Equity -0.79%