HSBC launches low-fee MPF scheme with index funds tracking H-shares

HSBC announced a new MPF scheme for Q1 2011, charging 0.79%–0.99% — below typical market levels. It includes index funds (ETFs) tracking the Hang Seng China Enterprises Index and the Hang Seng Index at a 0.9% annual management fee; self-selected US, European or Asia-Pacific funds at 0.99%; and a conservative fund at 0.79%.

Why are index funds cheaper?

Because they don’t need active stock-picking — management and trading costs are structurally lower. HSBC Insurance chief Leo Chu sees strong market demand for index funds and expects overall MPF fees to fall as the market grows.

How big is HSBC’s MPF business?

MPF assets under its management reached $115 billion by October 2010 — 28 times the level a decade earlier and 32% of Hong Kong’s total MPF assets. Low fees plus scale give HSBC an edge in the fee-cutting race.

When choosing a scheme, compare fees alongside fund performance at MPF fund comparison.