Stephen Vines

The View | Dismal returns of MPF’s low-fee fund are a symptom of the scheme’s overall mediocrity

Stephen Vines says tinkering with the Mandatory Provident Fund won’t do much good, the scheme itself needs to go

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Members of the Alliance for Universal Pensions protest outside the Legislative Council before Financial Secretary Paul Chan Mo-po delivered his budget in February. The low-management-fee option of the Mandatory Provident Fund garnered worse returns than schemes with a heavy equity emphasis. Photo: K. Y. Cheng

Stephen Vines

Published: 1:15pm, 16 May 2018Updated: 11:12pm, 16 May 2018

The Mandatory Provident Fund is the gift that never stops giving for fund managers but, for everyone else, it remains a dud and, as a new report shows, things actually get worse for customers after alleged improvements have been made.

The report from Convoy Financial Services, which monitors MPF performance, found that the “default” low fee fund scheme launched last April underperformed other MPF funds, returning an average of 2.82 per cent in the 13 months to April, compared to healthy double-digit returns for more or less anything with a heavy equity emphasis.

Yet again the suckers who were led to believe that things were improving over at the MPF discovered that a strategy capping management fees at 0.75 per cent meant that the modest savings made were entirely overshadowed by the gains that could have been made in most other funds.

The excuse for the poor performance of the MPF’s funds with low management fees is that the timing of their launch was unfortunate because, while equity prices soared, bond values largely languished.