HSBC Cuts Three More MPF Fund Fees by 20–40%, Covering $46 Billion in Assets

MPF market leader HSBC, having launched its “Choice” plan with management fees as low as 0.79%, has now cut management fees on three more MPF funds by 20% to 40% — another win for MPF fee reductions.

Which three funds, and by how much?

The MPF Conservative Fund, Global Bond Fund and Hang Seng Index Fund — up to 40% off. From 1 March 2011, fees on the three funds under HSBC’s “SuperTrust”, “ValueChoice” and “SimpleChoice” plans fall from 1.25%–1.5% to 0.79%–0.99%. The Hang Seng Index Fund drops from 1.5% to 0.9% — the steepest cut. Mark Yeo, head of insurance and employee benefits, said the bank’s average fund expense ratio of 1.85% should fall 10%–20%.

How many members benefit?

At least $46 billion in assets. The three funds make up over 40% of HSBC’s MPF assets under management. With HSBC managing over $115 billion as of November 2010, benefited assets amount to at least $46 billion. HSBC and Hang Seng hold 32.4% of MPF market assets as of September 2010. Last December the bank had 2 million existing and preserved accounts combined, over half of them preserved.

When will equity funds be cut?

Passive funds first; active equity funds must wait. Equity funds aren’t included this round — Yeo explained the three are passive or lower-cost, unlike actively managed equity funds. But he conceded that as MPF assets grow, equity fund fees have room to fall and will be reviewed regularly. He denied this was a “price war”, though he didn’t rule out rivals following suit.

To compare charges and returns across MPF funds, visit MPF fund comparison.