No connection between higher MPF fees and better returns

In their responses to the proposal to cap MPF fees, MPF providers - and even some government officials - are misleading the public.

One said that "rather than talking about adding a cap on fees, the authority should ask people about the performance of MPF funds", and noted that while some MPF funds charged low fees, their performances were "awful". Yet another said: "This will limit the choice of employees as some may not mind paying a higher fee for a higher return product."

These defenders of high fees are implying that if you pay a higher fee, you will get a higher return on investment. But it is a well-known fact in the investment field that this simply is not true. Higher fees do not correlate at all with higher returns on investment. This has been proven in one statistical study after another, over decades of research.

Any investment industry professional who does not know this must have been at the very bottom of his investments class - or else the class pointedly skipped the facts, as do many training programmes for sellers of costly investment products.

True, a person who is not knowledgeable about investment might find this counter-intuitive. But it is appalling that many professionals do not know it either, or have somehow blotted it from their minds; as their handsome salaries depend on collecting high fees.

In most other fields, it's often true that you get what you pay for - a higher priced product or service delivers higher quality or performance. Not so in investment. Studies have shown that fees are a deadweight loss.