MPF fees: don’t choose a provider on price alone — check the fund range too

Hong Kong MPF fell more than 5% in a single month in September 2011 as markets swung wildly. An MPF intermediary warned against panic-switching portfolios — and against picking a provider purely on fees.

Why shouldn’t price be the only criterion?

Towers Watson’s Hong Kong head Philip Tso noted the “MPF Employee Choice Arrangement” was expected as early as the second half of 2012, with HSBC, AIA and others already cutting some fund fees; but he cautioned that among the 21 providers, not all offered a full fund range — some did not even offer capital-preservation funds for low-risk investors. Choosing on price alone could land you with a provider that lacks the funds you need.

He added that the full year’s returns were hard to predict but he hoped they would turn positive. Once employee choice launched, providers would compete by cutting fees and expanding product ranges — good news for workers.

Should you change your portfolio when markets swing?

No — short-term volatility should not derail a long-term plan. Tso advised setting allocations by age and risk tolerance before investing: near-retirees should cut equity to 20–30%, while younger members could go up to 90%, keeping at least 20–30% in Hong Kong equities to hedge local inflation.

On European debt, he noted MPF funds held little troubled sovereign debt and European bonds had performed decently, so bond investors need not deliberately underweight Europe — a global bond fund diversifies the risk.

To compare providers’ fees and fund ranges, use MPF fund search.