Why Did HSBC Slash MPF Management Fees?

Why Did HSBC Slash MPF Management Fees?

On 9 February 2011, HSBC Insurance announced fee cuts from 1 March on designated funds under its SuperTrust, Smart and EasyChoice plans. The MPF Conservative Fund dropped from 1.25% to 0.79%, the Global Bond Fund from 1.25% to 0.99%, and the Hang Seng Index Fund from 1.5% to 0.9% — up to 40% off.

Why cut?

HSBC’s Chu Wing-yiu cited a survey showing 32% of employees counted on MPF for retirement, with active management set to grow; the cuts aligned existing plans with the coming “Choice” plan. HSBC held 32.4% MPF market share at September 2010, with HK$115 billion-plus under management.

Was it the cheapest after the cut?

The 0.9% Hang Seng Index fund still wasn’t the market’s cheapest — but the direction was right. Competition is the real fee cutter, and semi-portability would add pressure.

How to find the cheapest fund?

Don’t guess — compare MPF funds on expense ratios directly.