Think Before You Switch: Without Full Information, Comparing MPF Is Guesswork

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

Hong Kong’s MPF semi-portability took effect in November 2012 — members could finally choose. But Ming Pao warned: progress yes, but without information it could become a trap. Across 523 MPF funds, one-year returns ranged from +5.81% to -14.04%; comparing MPF without comprehensive data risks choosing worse than not choosing.

How wide is the performance gap?

Best +5.81%, worst -14.04%. Of 341 funds with five-year records, 159 — 46.6% — were in the red. Same system, wildly different fortunes.

How do MPF fees compare internationally?

Pricier than the UK, Australia, Singapore and Chile. Hong Kong’s average fund expense ratio was 1.74% versus 1.19% in the UK, 1.21% in Australia, 1.41% in Singapore and 0.56% in Chile — the highest of the five. That implies roughly HK$7 billion eaten by fees each year.

How do you choose without falling into the trap?

The MPFA must provide comprehensive information. Ming Pao argued members need full data on fund fees and performance before switching, or semi-portability is choice in name only. Notably, research showed 70–80% of mutual funds underperform ETFs — MPF’s economies of scale should leave room for fee cuts.

What is the lesson from 2012?

Choice needs visibility. Semi-portability granted the right to choose, but Ming Pao saw early: choice without information is half a reform. Comparing MPF takes data, not gut feel — a truth that still holds today.