JPMorgan urges looser MPF fund approval: high-risk funds nearly extinct since Lehman

The MPFA’s tightening vetting of new MPF funds was making it hard for the industry to launch products. Edwin Chan, JPMorgan Asset Management’s institutional and pensions chief, revealed the firm had filed no new fund applications at all under the strict regime.

How tight was approval?

Since Lehman’s 2008 collapse, the MPFA had all but blocked high-risk funds. Chan cited JPMorgan’s 2009 emerging-market bond fund: prepared from 2007, ready to launch in 2008 — then Lehman fell a week before launch and regulators halted the product. Industry voices added that regulators, fearing retrospective blame, were rejecting higher-risk funds on the grounds that “contributors can’t choose wisely”.

What did JPMorgan think of the fee war?

Limited room to fall. MPF products were cutting prices, but Chan saw no new wave of cuts coming: MPF had operating costs, and the coming Employee Choice Arrangement would require system upgrades, leaving little room for fee reductions. On investment direction, he tipped emerging markets — growing far faster than developed markets — as MPF’s continuing growth story.

The approval-versus-fees tug-of-war reflected MPF’s dilemma between protection and choice. Compare existing funds’ fee levels with MPF fund search.