How much do you know about MPF fund fees? The gap between 1.5% and 0.5% is bigger than you think

Many investors ignore fund management fees, treating them as inevitable and unavoidable. A Callan Associates survey this year found only 50% of institutional respondents considered their fees reasonable; half had no plans to review fees in the coming year, and some had never reviewed them at all.

How does the market mood change your fee sensitivity?

Academics note: the better the market runs, the less people care about fees — only when markets fall do they remember the substantial fees they are paying. Example: two near-identical funds charging 1.5% and 0.5% a year. If the market rises 1%, your statement shows +0.5% versus -0.5%; if it surges 25%, 23.5% versus 24.5% — most investors shrug.

What do fees add up to?

Don’t dismiss 1.5% versus 0.5% as trivial. On $3,000 a month — $36,000 a year — 1.5% is $540 a year. When markets fall and capital shrinks, the same percentage fee keeps compounding year after year — soon far more than three figures.

How should you view MPF fees?

Whatever the fund, never ignore management fees; in up markets and down, be a smart consumer. MPF fund fees eat directly into long-term returns — comparing charges before choosing funds is the smart member’s basic discipline.

To compare MPF fund fees, visit MPF fund comparison.