MPF’s decade: just 2.96% a year — will semi-portability cut fees 10%?

Ten years into MPF, a consultancy’s report card may disappoint workers: cumulative ten-year returns of 33.91% — about 2.96% a year. But the firm believes semi-portability could cut fund fees by 10% this year.

Which fund types did best over ten years?

Asian equity funds returned 102% cumulatively, beating the MSCI Asia ex-Japan’s 73.04%. Asian equity gained 17.03% last year; Hong Kong equity funds returned 11.49% last year and 95.33% over ten years, edging the Hang Seng’s 10.67% and 90.99%.

Why might fees fall 10%?

Semi-portability is coming, competition is pressuring cuts, and growing asset scale dilutes Fund Expense Ratios. Gain Miles’ Gloria Siu says providers have already started trimming fees — though FERs only require disclosure two years after a fund’s launch, so cuts may not show this year.

What’s the 2011 outlook?

H1 can ride last year’s momentum; H2 faces pressure; money keeps flowing to Asia-Pacific. Siu expects US and partial European recovery with funds still heading to Asia-Pacific — but Greater China volatility means don’t concentrate on one market. Analyst Chan Cheung-man notes limited yuan circulation and investment restrictions keep yuan MPF products scarce; improving US corporate earnings plus QE2 favour equities, while Europe and Japan look neutral-to-soft. RCM’s Ken Yu expects further rate hikes in H1 and likes the US alongside emerging markets.

To compare funds’ ten-year records and fees, visit MPF fund comparison.