Fidelity cuts MPF fees: not about poaching, switching jumps 30–40% in volatile markets

陸劍平, Fidelity’s head of institutional business, told a press briefing on 11 November 2011 that the firm would cut fees on conservative and non-conservative funds from Saturday 12 November — down 20.6% and 7.6% respectively, covering 9% and 91% of the firm’s client base.

What did Fidelity say about the MPF fee cut?

Fidelity stressed the cut was not about winning new clients and would barely move its market share; the Employee Choice Arrangement due in 2012 was only one consideration. The firm said it would keep reviewing fees to stay competitive, funded by savings on administration and trustee costs.

Three numbers on member behaviour in volatile markets

陸劍平’s figures sketched the classic retail pattern in turbulent markets: in volatile conditions, clients shifted into conservative funds 30%–40% more often than usual; and about 30% of survey respondents intended to move money once the ECA arrived. Fear-driven switching is the enemy of long-term MPF investing — rotating defensive at the lows locks in losses.

The era: the November 2011 fee-cut wave

November 2011 was the peak of Hong Kong’s MPF price war: Fidelity cut 7.6%–20.6% across the board, BCT cut 2%–17% on 14 funds (from January 2012), and Principal cut 10%–20% on Series 600/800. Three trustees moving within days shared one arithmetic: 11 years of asset accumulation had cheapened administration, and with the ECA approaching, cuts were both giveback and preparation.

What members can do

Fee cuts are welcome, but do not churn funds just because “fees fell” — switching is free, yet reallocating on headlines usually means buying high and selling low. Compare your own fund’s expense ratio first, then decide whether action is needed. The MPF education hub shows how to compare.