This MPF portfolio hypothesis uses the funds already tracked on the MPF page.
Hypothesis
Allocate a retirement portfolio as follows:
| Fund | Weight |
|---|---|
| World Bond Fund | 40% |
| Global Equity Fund | 25% |
| Capital Stable Fund | 15% |
| Hong Kong Bond Fund | 15% |
| Asia Pacific Equity Fund | 5% |
The requested allocation mentions Asia Equity Fund. The MPF page currently tracks Asia Pacific Equity Fund as the Asia equity exposure, so this post uses that fund’s MPF data.
Data Inputs
| Fund | ISIN | Expected annual return | Annualised risk | Market correlation |
|---|---|---|---|---|
| World Bond Fund | HK0000844354 | -0.98% | 7.93% | 0.22 |
| Global Equity Fund | HK0000844255 | 7.66% | 18.11% | 0.92 |
| Capital Stable Fund | HK0000844297 | -1.05% | 9.96% | 0.55 |
| Hong Kong Bond Fund | HK0000844362 | 0.97% | 4.24% | 0.25 |
| Asia Pacific Equity Fund | HK0000844248 | 7.04% | 24.42% | 0.85 |
Portfolio Estimate
| Metric | Value |
|---|---|
| Weighted expected annual return | 1.86% |
| Estimated annualised risk | 7.90% |
| Risk-free rate | 4.50% |
| Estimated Sharpe ratio | -0.334 |
The allocation is defensive: 55% is assigned to bond funds, 15% to the Capital Stable Fund, and 30% to equity funds. The result is lower equity exposure, but the expected return is pulled down by the World Bond Fund and Capital Stable Fund inputs in the current MPF dataset.
Read-Through
The portfolio may suit an investor who wants muted volatility and a large fixed-income anchor, but the current historical inputs do not compensate for a 4.5% risk-free rate. On these assumptions, the portfolio has a negative Sharpe ratio because the expected return is below the risk-free rate.
The key tension is the 40% World Bond allocation. It reduces equity drawdown risk, but its calibrated expected return is negative in the current data. If the aim is long-term capital growth, the hypothesis would need either a higher global equity weight, a lower bond allocation, or a different assumption about future bond returns.
Methodology
Expected return is calculated as the weighted average of the MPF funds’ expected annual returns from data/fund_metrics.json. Portfolio risk uses the MPF funds’ annualised standard deviations and the market-correlation assumptions from the same data source, with pairwise cross-fund correlation approximated from those market-correlation values.
This is a modelled allocation note, not investment advice. It excludes fees, taxes, contribution timing, member switching limits, and changes in fund factsheet data.