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A volatile month due to rising global uncertainties Convoy MPF Composite Index recorded a decrease of 2.73%

(30, August 2019—Hong Kong) As of 21 August, the Convoy MPF Composite Index was 227.11, with a 2.73% month-to-month decrease. The Convoy MPF Equity Index was 239.64, with a decrease in 4.85% on a monthly basis. The Convoy MPF Bond Index was 162.35, with a monthly increase of 1.47%. The Convoy MPF DIS Core Accumulation Indices, which was launched last month, outperformed both the MPF Composite Index and the MPF Equity Index. The Convoy MPF DIS Age 65 Plus Index, recorded a month-on-month increase of 1.33% and the Convoy MPF DIS Core Accumulation Index, a decrease of 1.07%.

 

Rising global uncertainties resulted in more volatility

It was a volatile month for equities amidst rising uncertainties among various areas of the globe. Sterling saw strong downward pressure in the beginning of the period due to increasing risk of a hard Brexit following Boris Johnson assuming power. On the other hand, the US Federal Reserve cut rates by 25 basis points as the market expected by the end of July, but still the public was slightly disappointed when Jerome Powell did not commit that it was the beginning of a monetary easing cycle. 

 

The escalating trade conflict between the US and China has remained the centre stage. Following Trump’s decision to add an extra 10% tariff on USD 300 billion worth of Chinese imports, the RMB fell below a symbolic 7 yuan against the USD. While it was the weakest level to be seen since the financial turmoil of 2008, the US soon accused China of currency manipulation. Although there was a new trade war truce later as both countries agreed to resume talks, investors were clouded by a renewed growth concern after seeing a yield curve inversion between the 10-year and 2-year US treasury yields, which was broadly seen as a leading indicator that a recession is about to come. Against this backdrop, riskier assets tumbled as capital flew into safety assets.

 

Ms. Bonita Leong, Group Chief Product and Strategy Officer, Convoy Global Holdings Limited, said that with rising global uncertainties, one should stay invested for longer term gains, with regular monthly contributions. If you are not sure what to invest in, consider the mixed asset funds or the default investment strategies (DIS), which can perform better in volatile markets, as evidenced this month.

 

Summary of Performance of MPF Key Funds Class in August

Equity Funds:

Hong Kong Equity Fund (Index Tracking) suffered the most amongst the equity funds, recording a monthly decrease of 6.95% and a 4.51% January-to-date increase, exacerbated by persistent political unrest

Despite sell-off in equities, two equity funds managed positive returns – the global equity fund which focuses on US and Japan, and the other has a focus in the healthcare sector

 

Bonds Funds:

Bond funds generally had positive returns, and where it did not, it was hit by RMB exposures as the currency depreciated sharply

Global Bond Funds performed the best, recording a 1.77% month-on-month increase and a 6.18% January-to-date increase

 

Default Investment Strategy:

Mixed asset strategies with lower equity exposures benefitted

Mixed Asset – 81% to 100% was the worst performing mixed asset sector, recorded a 3.71% month-on-month decrease and a 9.50% January–to-date increase

Default Investment Strategy (DIS) – Age 65 Plus Fund was the better performing of the two DIS., with a monthly increase of 1.44% and a 9.69% January-to-date increase 

 

Convoy MPF Index Trend

n   SOURCE: CONVOY FINANCIAL SERVICES LIMITED

n   COMPILED BY THE CONVOY FINANCIAL SERVICES LIMITED

n   DISCLAIMER: THE CONTENT IS FOR REFERENCE ONLY AND DOES NOT CONSTITUTE ANY SUGGESTION AND OFFER FOR INVESTMENT. PLEASE DO NOT RELY ON THIS ARTICLE FOR YOUR INVESTMENT DECISION. INVESTMENT INVOLVES ELEMENTSOF RISK AND THE HISTORICAL DATA OF THE FUNDS IS NOT NECESSARILY AN INDICATOR OF THEIR FUTURE PERFORMANCE.CONVOY FINANCIAL SERVICES LIMITED ("CONVOY") HAS UNDERTAKEN REASONABLE EFFORT TO PREPARE THE CONVOY MPFINDICES. CONVOY CANNOT GUARANTEE THE ACCURACY

 

Performance of Key Funds Classes:

MPF Fund Sectors#

Month-on-month

January-to-date*

Asian Equity Fund

-5.66

4.18

China Equity Fund

-4.81

4.92

Europe Equity Fund

-3.96

9.57

Global Equity Fund

-2.86

14.89

Greater China Equity Fund

-4.13

9.73

Hong Kong Equity Fund

-6.09

6.06

Hong Kong Equity Fund (Index Tracking)

-6.95

4.51

Japan Equity Fund

-2.34

5.61

United States Equity Fund

-2.33

23.46

Uncategorized Equity Fund

-3.70

9.61

Asia Bond Fund

0.63

5.62

Global Bond Fund

1.77

6.18

Hong Kong Dollar Bond Fund

1.21

5.34

RMB Bond Fund

-0.92

1.55

Guaranteed Fund

0.04

3.50

Mixed Assets Fund (21% to 40% equity)

0.01

7.30

Mixed Assets Fund (41% to 60% equity)

-1.17

8.23

Mixed Assets Fund (61% to 80% equity)

-2.59

8.19

Mixed Assets Fund (81% to 100% equity)

-3.71

9.50

Default Investment Strategy – Age 65 Plus Fund

1.44

9.69

Default Investment Strategy–Core Accumulation Fund

-0.92

12.67

Uncategorized Mixed Assets Fund

-2.13  

9.66

MPF Conservative Fund

0.10

0.71

Money Market Fund – Other than MPF Conservative Fund

-0.86

0.14

#MPF FUND SECTORS BASED ON MPFA CLASSIFICATION
*PERFORMANCE IS CALCULATED FROM 22 JULY 2019 TO 21 AUGUST 2019; PERFORMANCE OF JANUARY-TO-DATE IS CALCULATED FROM 24 DECEMBER 2018
THE TABLE COVERS ALL MPF CONSTITUENT FUNDS IS CALCULATED USING AN EQUALLY WEIGHTED APPROACH AMONG ALL MPF CONSTITUENT FUNDS.

n   SOURCE: CONVOY FINANCIAL SERVICES LIMITED

n   COMPILED BY THE CONVOY FINANCIAL SERVICES LIMITED

n   DISCLAIMER: THE CONTENT IS FOR REFERENCE ONLY AND DOES NOT CONSTITUTE ANY SUGGESTION AND OFFER FOR INVESTMENT. PLEASE DO NOT RELY ON THIS ARTICLE FOR YOUR INVESTMENT DECISION. INVESTMENT INVOLVES ELEMENTSOF RISK AND THE HISTORICAL DATA OF THE FUNDS IS NOT NECESSARILY AN INDICATOR OF THEIR FUTURE PERFORMANCE.CONVOY FINANCIAL SERVICES LIMITED ("CONVOY") HAS UNDERTAKEN REASONABLE EFFORT TO PREPARE THE CONVOY MPFINDICES. CONVOY CANNOT GUARANTEE THE ACCURACY

Photo 1: Ms. Bonita Leong, Group Chief Product and Strategy Officer, Convoy Global Holdings Limited, said that with rising global uncertainties, one should stay invested for longer term gains, with regular monthly contributions. If you are not sure what to invest in, consider the mixed asset funds or the default investment strategies (DIS), which can perform better in volatile markets, as evidenced this month.

 

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