My MPF Portfolio: Fifth month of outperformance

September 2025 marked the fifth consecutive month in which my Manulife MPF portfolio outperformed the broader MPF system, extending a trend that began in March. The portfolio’s star performer, the Manulife MPF China Value Fund, spearheaded a 4.79% gain in September, comfortably outpacing the MPFR All Fund Performance Index, which climbed by 3.56% over the same period.

The outperformance of 123 basis points was driven largely by the China Value Fund, whose fund price rose by 10.11% for the month, according to MPF Ratings Limited. This impressive performance not only exceeded the median return of 8.23% among Hong Kong/China MPF equity fund peers, but also outperformed the Manulife MPF North American Equity Fund and other funds within my MPF portfolio.

As a result, the China Value Fund’s weighting within my MPF portfolio increased from 40.60% to 42.67%. And riding from the fund’s strong, by the end of the month, my MPF portfolio reached an all-time high of HKD 1,044,156, up from HKD 996,440 on 29 August.

Source: Author’s Manulife MPF account info.

The China Value Fund’s “value” investing strategy — selectively acquiring oversold Chinese equities during market downturns — has finally paid off, delivering stronger returns as the Chinese market rebounded in 2025. In contrast, US equities, which remain expensive as outlined in previous analyses, have seen my MPF portfolio’s weighting in North American Equity Fund trimmed from 25% to approximately 20%, and further down to 19.45% because of weaker performance as compared to the China Value Fund.

Historical fund allocations of my MPF portfolio:

Source: Author’s Manulife MPF account info.

Achieving YTD outperformance

As of 30 September 2025, my MPF portfolio posted a year-to-date gain of 17.51%, surpassing the 15.83% rise in the MPFR All Fund Performance Index. This represents an increase in the year-to-date outperformance, which widened from 29 basis points on 29 August to 168 basis points by the end of September.

The overvalued US equity market

Several indicators suggest that the US equity market is overvalued. Warren Buffett’s GDP-to-market-cap ratio and the Shiller price-to-earnings ratio both point to historically stretched valuations. Furthermore, the Consumer Price Index (CPI) is no longer a reliable gauge of inflation in the United States. Instead, the true cost of living, particularly in areas such as healthcare, reveals troubling inflationary pressures.

The North American Equity Fund, regrettably, closely resembles the overall US equity market. Taking SPDR S&P 500 ETF (SPY) as reference, its composition are highly concentrated in tech behemoths such as Amazon, Microsoft, Apple, NVIDIA, and Meta, which are trading at higher P/E ratios versus their historical levels.

Unlike low-beta strategies such as the AGF US Market Neutral Anti-Beta Fund (BTAL), MPF offers no anti-beta US equity option. Consequently, the only pragmatic course is to keep a reduced allocation to the North American Equity Fund, set at around 20%.

Top five holdings of US equity funds (2025–09–30)

Source: Yahoo.finance and Manulife.com

This measured approach balances caution with exposure, acknowledging that market movements are often propelled more by sentiment and momentum than by fundamentals. Maintaining a 20% weighting in the North American Equity Fund reflects this sentiment-driven reality, striking a reasonable balance between risk and opportunity.

Outlook My MPF portfolio’s focus on Chinese equities harnesses their attractive valuations and growing momentum while moderating exposure to the overpriced US market. Despite a year-to-date underperformance, the deliberate pivot toward Chinese equities, supported by prudent risk management, positions the portfolio for a robust recovery and consistent long-term growth.