Manulife joins the MPF price war: fee cuts ahead of employee choice

This is a rewrite of a report from March 2012.

With the MPF employee-choice scheme months away, trustees were cutting fees to win business. The second-largest trustee announced cuts to five funds from 23 April 2012, slashing its conservative fund from 1.25 per cent to 0.75 per cent — the cheapest among the five biggest MPF managers.

After the cuts, which trustee charged the least?

The cuts left Manulife’s 26 funds charging 0.75% to 1.95%, with its conservative fund the cheapest of the top five. Its chief executive said fees would stay competitive but would not say whether more cuts were coming. Two new funds launched alongside — a Hang Seng Index fund at 0.9 per cent and an Asia Pacific bond fund at 1.65 per cent, the latter putting 10 to 20 per cent into offshore renminbi bonds.

Was the price war nearly over?

Industry watchers thought so: Manulife’s cuts looked like catching up, not undercutting, and rivals showed little appetite to follow. BOC-Prudential said it had no plans to adjust fees, noting its dim sum bond exposure was only about HK$200 million — under 1 per cent — because the market lacked depth for bigger purchases. HSBC also held steady, saying its 0.79 per cent entry point was competitive after earlier cuts.

For members, switching trustees under employee choice carries no handling fee — but the cheapest fund is not automatically the best. Compare fees against fund performance and range, using the MPFA’s fee comparison platform before deciding.