MPF fee war erupts: Fidelity and BCT cut on the same day, up to 20% off

The Employee Choice Arrangement had not even launched when Fidelity and BCT fired the opening shots of Hong Kong’s MPF price war. On 11 November 2011 the two trustees held press conferences at almost the same hour: Fidelity cutting all MPF fees 7.6%–20.6% from 12 November, BCT cutting 14 funds’ management fees 2%–17% from 1 January 2012.

How do the two cuts compare?

Fidelity: conservative funds from 1.36% to 1.08%, non-conservative from 1.57% to 1.45% — cuts of 7.6%–20.6%, benefiting nearly 300,000 clients. BCT: 14 funds across its master-trust and industry schemes cut 2%–17%, benefiting nearly 70% of clients (over 370,000). Fidelity’s 陸劍平 insisted the cut was not meant to start a price war — bigger fund scale and lower costs drove the adjustment.

Paving the way for the ECA? Two different stories

On whether the cuts paved the way for the ECA, the two disagreed: BCT’s Ka Shi Lau opened by declaring the cut “preparation for the ECA”; 陸劍平 called it a strategic cyclical adjustment, not client poaching. Whatever the motive, employees were the winners.

BCT: second cut since 2008, membership at 550,000

Lau revealed BCT had cut fees in 2008 and membership across the two schemes had since grown to 550,000 — making this the right moment to adjust again. She flagged more to come: new products plus another fee round in May 2012.

What members can do

Two press conferences on one day turned isolated cuts into an industry race. For members, the real value was not the immediate saving but the new normal it established: fees only move down. Once the ECA arrives, revisit your portfolio through the fund expense ratio. The MPF education hub shows how to compare fees.