Convoy: passive MPF management fees still have room to fall

HSBC, the MPF market leader, will cut management fees on some MPF schemes from next month. Convoy Financial Services’ MPF business development director Kenrick Chung says HSBC’s lead benefits members but piles price pressure on smaller providers — particularly conservative passive funds such as index trackers, where fee cuts have the most room.

Why are fees falling now?

Deeper understanding of passive funds — not semi-portability. Chung says the cuts reflect the market’s growing grasp of passive funds and their pricing headroom, and are unrelated to the government’s semi-portability proposal.

How can smaller providers compete?

On service and new products, not just price. He suggests smaller providers compete on more than price: better service through online and SMS platforms, plus new fund choices matched to market demand.

To compare passive versus active fund fees, visit MPF fund comparison.