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Enoch Yiu

Fund-management company Dresdner RCM Global Investors will focus on large companies as the target clients of its Mandatory Provident Fund (MPF) business, according to Mark Konyn, director and head of marketing in Asia.

 The company's strategy is in sharp contrast to that of most MPF providers, which are targeting enterprises with fewer than 50 staff.

 'We would like to get the companies as large as possible,' Mr Konyn said.

 He said big companies usually would be more focused on investment returns than small players.

 As a result, the larger firms would prefer to join the MPF plans run by fund-management companies as they could usually offer higher investment returns.

 According to a survey of Watson Wyatt, Dresdner RCM's pension fund ranked the third-highest in returns in Hong Kong last year with 45.9 per cent.

 The main obstacle facing fund-management companies competing in the MPF market is a lack of sales channels.

 Insurance companies can use their large agency forces, while banks can use their branch networks to sell MPF products.

 Mr Konyn, however, said insurance agents and bank staff seldom contacted the large firms as their target clients were small and medium-sized companies.

 He said he had been the only MPF provider representative to contact a company with more than 10,000 staff, indicating the insurers and banks were not so enthusiastic to sell the MPF plans to large companies.

 Dresdner RCM has started an MPF scheme with five investment choices.

 'The MPF is a new product in Hong Kong.

 'We want to launch simple products with a small number of investment choices in the beginning,' he said. 'When the employers and employees are more familiar with the pension schemes, we will increase the fund choices for them.'  The investment house would team up with Aetna and HSBC Provident Trustee (Hong Kong) to conduct the MPF plan, Mr Konyn said.

 Dresdner RCM is responsible for the sale and investment of the schemes, while Aetna is the administrator and HSBC the trustee.

 He said the company would not join the MPF price war to cut the fees as it would like to compete with investment returns.

 According to Dresdner RCM's survey, most employers would not see charges as an important consideration when they decided on MPF providers, he said. Rather, they would be concerned about the providers' investment performance, service quality, reputation, administrative support and simplicity of the products.

 'The right investment decision would provide better returns to the employees than offering them lower fees,' he said.

MPF 



Dresdner RCM makes funds pitch for larger companies