Hong Kong’s Mandatory Provident Fund (MPF) industry supervisor has unveiled a one-stop platform where pension contributors will be able to review the performance and management fees of their funds, in a move to boost transparency of the city’s largest public retirement plan.
The MPF Fund Platform merges two separate performance and fee platforms together with a list of low fee funds, and a list of funds in the Default Investment Strategy (DIS) to which contributions from members who don’t select their own funds are channelled.
It “provides a one-stop solution for MPF scheme members to examine information about different MPF funds and compare their management fees and investment performance”, the Mandatory Provident Fund Scheme Authority (MPFA) says in a statement on April 29, when the single platform was launched.
The MPFA will now ask trustees to identify reasons for the different levels of management fees of their MPF funds and, if necessary, require them to review the fee of individual funds.
Trustees will also be asked to disclose the breakdown of funds’ management fees in a standardised format in the offering documents. The aim is to enhance consumer rights and encourage market competition, an unnamed MPFA spokesperson says in the statement.
He notes that the MPF is a privately managed system, and that management fees for most funds are determined by the market. The exceptions are DIS funds, and the MPF Conservative Fund, which invests exclusively in short-term bank deposits or short-term bonds.
According to the spokesperson, the one-stop platform “will help promote competition among industry players” and help MPF members “make an informed choice in selecting high value-for-money funds that meet their personal needs”.
Bonita Leong, group chief product and strategy officer at investment advisory firm Convoy Global Holdings, tells Asia Asset Management that the platform is user-friendly, providing information of more than 400 MPF funds covering 14 trustees.
“We understand that some providers are driving their MPF e-strategy to enable more efficiency for customers via online tools,” she says, adding that the one-stop platform will help users who self-service with such tools. Overall, she says it will cut costs and help reduce the fund expense ratio over time.
The MPF, which was introduced in 2000, had HK$813 billion (US$104.2 billion) of total assets as of December 2018.