AMTD cuts management fees on MPF funds by half

24 September 2013   Category: News, China, Hong Kong   By Asia Asset Management

AMTD Financial Planning Limited (AMTD) announced on September 18 a reduction in management fees across a total of 14 entire constituent funds under the AMTD MPF Scheme, reducing them to 0.9%, down by up to 0.78 basis points or a 46% cut. The new fees are retroactively effective from July 1, meaning that both new and existing members can benefit immediately. 
This change affects all constituent funds in the AMTD MPF Scheme which have adjusted downward from 1.68% to a fixed fee of 0.9%, slashed by 0.78 basis points or 46%. The exception is the "AMTD Invesco MPF Conservative Fund" which has had a reduction in fees from 1.38% to 0.9%, cut by 0.48 basis points or 35%. 
AMTD’s move addresses the Mandatory Provident Fund Schemes Authority’s (MPFA's) regular reviews on controlling the Mandatory Provident Fund’s (MPF's) fees and market concerns about fee levels, in line with the government long-term reform proposals on MPF issues. More importantly, it also provides employees with more choice in low-fee MPF funds and enhances the competitiveness of its MPF products. 
Alan Tsang, director and CEO of AMTD, said: “We evaluate and assess our MPF scheme from time to time. Since the Employee Choice Agreement (ECA) commenced on November 1, 2012, we have established an online service platform to simplify the transfer of MPF accrued benefits in catering to the needs of our clients. This has enabled us to successfully achieve greater administrative efficiencies and so allowed us to cut our management fee to 0.9% across our entire MPF fund categories, and may also reduce overall operation costs.” Mr. Tsang added: “Our MPF net funds under management have grown by 8% from November 1, 2012 to July 31, 2013, demonstrating that our MPF funds are welcomed by Hong Kong employees and capable of enhancing market connectivity.” 
The newly established AMTD MPF online service platform enables clients to execute various actions via the website, notably allowing them to set up their own retirement portfolios, review their personal accounts on a regular basis, reallocate MPF funds that are subject to different market cycles and renew their personal information as needed. This helps save them time and gives them increased flexibility when managing the funds. 
AMTD is committed to both controlling administrative costs and maximising the returns on MPF funds for its scheme members, with the aim of promoting high-quality MPF services and offering better, more thorough protection to MPF scheme members. According to Morningstar Asia, as of September 16, 2013 some AMTD MPF funds have been outperforming year-to-date – for example, the "AMTD Invesco Target 2048 Retirement Fund" carried a one-year return of 17.6%, largely exceeding those of its peers. The "AMTD Invesco Europe Fund" also demonstrated strong results in the fund category with a return of 29.5% over the same period. 
On the MPF investment outlook for the coming fourth quarter, Mr. Tsang said: “Thanks to China’s economic data showing a pick-up, and the cooling of worries over local debts and overcapacity problems in various industries, we are confident that China will achieve its GDP growth target of 7.5% this year, and as such are overweighting China and Hong Kong equity funds. US 10-year treasury bonds have tumbled on fears of the Fed taper, and bond funds in general are likely to see some fluctuation in the short- to medium-term, although RMB dim-sum bonds are expected to stay stable as they are resistant to global bond markets.” He continued: “The recent mixed economic data in the US is less likely to affect the decision on the QE exit strategy, as capital is expected to flow into dollar assets and will continue to support US equity funds.” 
Mr. Tsang further noted: “Scheme members should consider four main factors when rebalancing their MPF fund portfolio – the fee, the product, the trustee’s service and personal priorities. This will enable them to properly plan their long-term investment portfolio and have the greatest protection for their life after retirement.”