AIA MPF: 45bps Rebate, No New Index Funds for Now

This article is a rewrite of a report from November 2012.

After semi-portability, some trustees launched cheap index-tracking products to win clients. AIA Pensions and Trustee chief Bonnie Tse said AIA MPF already had seven low-fee regional funds, six of them index trackers — enough. No new ones for now.

How was AIA fighting?

A 45-basis-point first-year rebate. On rivals cutting fees, Tse replied the firm already had a rebate programme paying 45bps in year one. With seven funds already cheap, no new index trackers were needed.

What about a public trustee?

No details, no comment. On regulators floating a public-trustee system to control fees and quality, she said the lack of detail made comment impossible — but stressed 16 trustees already meant healthy competition.

Would cross-selling run wild?

MPF products only. Asked whether semi-portability opened cross-selling, she stressed that under conduct rules, cross-selling would cover MPF products only — never other wealth products.

What is the lesson from 2012?

“Enough, no more” was a 2012 leader’s confidence — and its baggage. AIA then believed six index funds plus 45bps would suffice. But semi-portability never rewarded “enough”; it rewarded “better”. Years on, index and low-fee products bloom everywhere — even those who said “enough” keep adding.