AIA lowers MPF fees

Move may trigger new round of cuts. AIA announced on Wednesday that it will slash the management fees for mandatory provident funds (MPF), a move some analysts say could trigger a new round of fee cuts, benefiting MPF members.

What is being cut?

In a move to lure customers, the Asia-focused insurer will introduce a series of low-fee funds, including a bond fund and three equity funds, with management fees of up to 0.99 percent per annum of their net asset value (NAV) at the constituent fund level. Meanwhile, the management fees of the Global Bond Fund, MPF Conservative Fund and World Equity Fund under the existing MPF schemes will also be reduced to the same level.

Why is AIA cutting fees now?

The move courts customers and strategically positions the firm for MPF “semi-portability.” With rivals cutting prices in turn, AIA hopes low-fee funds will win it a head start; analysts say peers may follow, triggering a fresh round of cuts.

How should workers respond to the fee war?

Lower fees are welcome, but fund selection shouldn’t hinge on fees alone — performance, risk level and fit with personal investment goals matter too. Compare MPF fund fees and performance across providers and learn a well-rounded fund-evaluation approach via MPF education.