Some employees believe you get what you pay for — that a pricier fund is worth it if the returns are better. An MPFA study demolishes that idea: there is no link between an MPF fund’s fund expense ratio (FER) and its investment performance. Expensive is not necessarily good.
| Fund category | Fee-vs-return relationship |
|---|---|
| Equity funds (most popular) | No link at all — 1-year, 3-year and 5-year returns alike |
| Mixed-asset funds | Inverse: the higher the fee, the worse the return |
| Bond funds | Inverse: the higher the fee, the worse the return |
| Guaranteed funds | Inverse: the higher the fee, the worse the return |
For the most popular equity funds, fees and returns are completely decoupled; the other three categories show an inverse pattern — paying more and getting less.
| Date | Average fund expense ratio |
|---|---|
| July 2007 | 2.06% |
| October 2016 | 1.56% (record low, down 24% cumulatively) |
Expense ratios have fallen across every fund category. An MPFA non-executive director said at the press briefing: “If two funds have similar investment objectives and one charges less, that fund should deliver better returns to members.”
The MPFA’s point is blunt: fees are a known number, returns are an unknown one. Since the study proves expensive funds carry no performance guarantee, fees should be a primary consideration when choosing a fund — not treated as a proxy for quality.
The MPFA also cautions against comparing MPF fund fees with retail fund fees — MPF schemes involve plan administration that retail funds do not, while most retail funds charge subscription or redemption fees that MPF funds do not. Meaningful comparisons with overseas pension fees are very difficult, given differences in scheme design, maturity and asset scale.

Sixteen years ago today — 1 December 2000 — the Mandatory Provident Fund...

The average fund expense ratio across MPF funds has fallen 24 per cent, from...

In November 2017, the Federation of Trade Unions published research that...