Bank of East Asia cut MPF management fees in 2012: 23pc off nine funds

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

Era analysis: The original was a brief news item: Bank of East Asia’s trustee arm announced in July 2012 that it would cut MPF management fees on 10 constituent funds. Nine of them (six equity funds and three mixed-asset funds) dropped from 1.55 per cent to 1.2 per cent of net asset value a year — a 23 per cent cut — while the BEA (MPF) Hong Kong Equity Fund fell from 1.45 per cent to 1.2 per cent, a 17 per cent cut. The new fees took effect on 3 August.

At the same time, the trustee launched two new constituent funds — renminbi/HKD money market funds under the main and industry schemes — investing mainly in HKD- and RMB-denominated certificates of deposit, time deposits and offshore debt securities, with a 0.79 per cent annual management fee.

Seen today, the item matters because: it captured the fee war already under way months before semi-portability launched in November 2012. Providers were cutting charges in response to public criticism that MPF fees were too high — an Ernst & Young study that year put Hong Kong’s average at 1.74 per cent, above Australia and Singapore. A short fee-cut notice, in other words, reflected an entire industry bracing for open competition.