Manulife follows rivals in slashing MPF fees

PUBLISHED : Saturday, 29 September, 2007, 12:00am
UPDATED : Saturday, 29 September, 2007, 12:00am


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Manulife International, the city's second-largest Mandatory Provident Fund provider, lowered fees for its two short-term fixed-income funds after rivals cut fees for their most conservative investment options.

More MPF providers, including HSBC, were expected to follow suit, market watchers said.

Starting next week, the management fee for Manulife MPF Capital Preservation Fund (CPF) will be lowered by 0.5 percentage point to 1.75 per cent while the fee for its Manulife MPF Interest Fund would be reduced 0.25 percentage point to 2 per cent.

The company expects that 40 per cent of its MPF scheme members could be affected by the reductions.

The assets of the two funds account for 14.6 per cent of Manulife's MPF assets, which stood at HK$39 billion at the end of last month.

Belinda Luk, an assistant vice-president of employee benefits at Manulife, said the move came about when, during its continuous review of the business, the company saw there was room to lower fees. '[But] we have seen no room to cut fees for other funds at the moment,' she said.

AIA-JF, the third-largest MPF provider, and Bank Consortium Trust, the fifth-largest MPF provider, cut their fees for CPF to 1.25 per cent and 1.2 per cent earlier this month.

Bernard Chan, a co-founder of Bank Consortium Trust, said he expected most MPF providers would follow the trend of cutting fees if they wanted to maintain their market share. 'It's likely that HSBC will also slash its fee,' he said.

A spokesman for HSBC said it would hold a briefing on Tuesday to update information about its MPF business but made no further comment. HSBC and Hang Seng Bank have more than 30 per cent of the MPF market, making them the biggest providers.

Mr Chan expected most companies would cut their fees for simple investment products such as CPF.