Date
11 December 2017
Lau Ka-shi expects the average cost of the new core funds to be high initially. Photo: HKEJ
Lau Ka-shi expects the average cost of the new core funds to be high initially. Photo: HKEJ

MPF core funds expected to be costly at first

Not much room is expected for MPF providers to lower their overall fees in the first year after the proposed launch of core funds, the Hong Kong Economic Journal reported Tuesday.

Bank Consortium Trust Co. Ltd. managing director and chief executive Lau Ka-shi said providers under the Mandatory Provident Fund scheme are spending more on the educational and operating fronts for the launch of the core funds, which will certainly weigh on costs.

The MPF authority has set a ceiling of 0.75 percent on the fees for the core funds.

The average cost of the core funds will initially be high, Lau said, as not many members of the scheme will switch to those funds, which are supposed to be launched next year.

At the end of last year, the average cost ratio of MPF funds dropped to a record low of 1.65 percent, compared with 1.68 percent in November.

Market players have proposed a standardized core fund, seeking to lower costs through collaboration  among several MPF providers.

Lau, however, said the key lies not in the establishment of a single standardized core fund but in a standardized investment strategy aligned with the age of MPF holders to lower investment risks and costs.

So, different core funds can provide MPF holders with similar returns from different portfolios of asset classes, he said.

–Contact us at [email protected]

VW/JP/FL

Freelance journalist

EJI Weekly Newsletter

Please click here to unsubscribe