BCT said to target equity funds in fee cut to lock in clients as Sun Life holds firm

Hong Kong’s MPF trustees were duelling for market share, with BCT the latest to join — reportedly concentrating its cuts on equity funds rather than Fidelity’s across-the-board slash. Sun Life, meanwhile, held its ground: actively managed funds cannot win on price, it said; investment returns matter most.

Why start the fight before the ECA?

The industry read was blunt: providers were not waiting for the Employee Choice Arrangement’s mid-2012 launch — the early scramble was about locking in clients before anyone could leave. BCT’s master-trust scheme held 20 funds with an all-in fund expense ratio of 1.52%, below the market average of 1.78% across 523 funds. That even a not-the-priciest operator would cut again, insiders said, showed the industry racing to stake ground first.

Sun Life: active funds can’t compete on price

Sun Life’s BestServe unit stood pat. 陸季嬋, its senior vice-president for pensions and group insurance, pointed overseas: Australia’s pension assets were 17 times Hong Kong’s and Canada’s 30 times, yet Australian fees ran 0.5%–0.6% and Canada’s 0.8% — against Hong Kong’s 1.78% average, “not expensive”. Sun Life’s equity funds charged about 1.5%–1.6%, still below peers’ 1.9%; for manager-run active products, 1% was the floor — cutting further would leave “no meat”.

BCT: ECA in H2, competition intensifying

BCT said the ECA was expected in the second half of next year and competition would intensify; as a top-five MPF provider and the largest trustee, it would roll out new strategies to seize the moment. Fidelity, meanwhile, cut management fees across the line from 7.64%, with conservative funds slashed 20.59% — an average cut under 10%.

What members can do

A client-lock-in battle is good news for members: trustees cut to keep you, so the leverage is yours. But heed Sun Life’s caveat — active funds have a cost floor, and past a point the contest is always about returns. When switching on price, put fees and performance on the same table. The MPF education hub shows how to compare.