Principal Fires the First Shot in the MPF Fee War

This article is a rewrite of a report from January 2012.

With MPF semi-portability scheduled for November 2012, Principal Trust has moved first in the industry price war. Management fees on conservative funds across three of its MPF series fall from 1 per cent to 0.95 per cent, and the Hang Seng Index fund in its 600 series drops from 1 per cent to 0.89 per cent, effective February 1. The firm also plans to grow headcount by about 10 per cent to handle the extra sales workload portability will bring.

How much are fees falling?

The two new 800-series funds answer demand for structured, stable-return products. Principal has also asked the MPFA to merge its 500 and 600 series, with approval expected by year-end — a clearer product line that should make choosing easier for employees while trimming operating costs.

Will fees fall further?

Fees should keep falling. The Asia president of Principal Financial Group said MPF charges still have room to come down, and the firm will weigh fee rates against investment performance to keep charges as low as possible. Headcount, now about 193, will rise by roughly a tenth, concentrated in frontline sales and client relations. Compare MPF trustee fees to see who offers the best value.