Size matters as fee pressures bite smaller MPF schemes

24th January 2024

Big schemes dominate MPF’s 2024 annual scheme ratings

Key points are as follows:

  • Independent MPF research provider, MPF Ratings announces its Gold, Silver and Bronze 2024 MPF scheme ratings. (See Table 1)
  • Schemes are assessed not just on performance but on a whole of scheme value-for-money basis. Schemes delivering the best value-for-money are rated Gold.
  • In 2024, Gold rated schemes cover 87% of MPF’s total assets compared to only 17% when ratings were introduced in 2013. Over the same period fees have fallen 21.7%. (See chart 1)
  • Lower fees put pressure on scheme margins however the ability of larger schemes to scale their businesses gives them a competitive advantage.
  • MPF ended 2023 with a total asset size of $1.14tr, equivalent to an average member account balance of $243,000 per 4.69m members on the back of an annual return of 3.51%.

MPF Ratings, Hong Kong’s independent provider of MPF research, views and education today announced its highly anticipated 2024 annual MPF scheme ratings. The public nature of the ratings and its focus on a variety of value-for-money metrics beyond investment performance and fees makes the ratings unique within MPF.

When announcing its 2024 scheme ratings MPF Ratings’ Chairman, Francis Chung (叢川普), noted that Gold rated MPF schemes (schemes delivering the highest levels of value-for-money) accounted for 87% of MPF’s total assets. By comparison, when the ratings were first introduced in 2013, Gold rated schemes only accounted for 17% of total assets.

According to Mr Chung, larger MPF schemes such as HSBC Mandatory Provident Fund – SuperTrust Plus and Manulife Global Select (MPF) Scheme benefit in a relative sense when fees fall because their businesses generate more efficient economies of scale that their smaller competitors, allowing them to deliver better value for members.  Notably, schemes’ ability to deliver better value is now under even closer scrutiny under the MPFA’s “Initiative to Enhance Transparency of Governance Reporting of MPF Schemes”. The initiative requires MPF schemes to publish and justify their own governance, sustainable investment and overall value to member assessments – reinforcing the importance of MPF Ratings’ independent value-for-money focused scheme ratings.


Why larger schemes dominate MPF Ratings’ 2024 Gold ratings list?

“As the relationship between size and quality has increased, MPF fee levels have decreased. Falling fee levels place pressure on margins which in turn highlights the importance of scale. Larger MPF schemes have a scale advantage which allows them to reinvest for the benefit of their members, a trend which we believe is likely to continue as MPF moves towards eMPF and beyond.”

Why MPF Ratings’ Gold, Silver and Bronze rating of MPF schemes is significant and unique

“MPF Ratings’ rates MPF schemes Gold, Silver and Bronze. Not only are the ratings independent, but they are also publicly available, offering MPF’s 4.69m members an independent assessment of schemes they are members of.”

MPFA’s “Initiative to Enhance Transparency of Governance Reporting”

“By asking MPF trustees to determine and publish their own value-for-money metrics, the accountable nature of the MPFA’s ‘Initiative to Enhance Transparency of Governance Reporting’ significantly benefits MPF’s 4.69m members. MPF Ratings’ rating of MPF schemes complements the MPFA’s initiative, allowing us to independently assess if schemes are approaching, meeting or exceeding industry standards.”

Full list of MPF Ratings’ Gold, Silver and Bronze rated MPF schemes

Table 1: MPF Ratings 2024 MPF scheme ratings (ranked by scheme rating and asset size)

Source: MPF Ratings

Chart 1: Market Share of MPF Ratings’ Gold rated schemes and Average fund expense ratio (FER) of MPF funds since 31 December 2012

Source: MPF Ratings (for the market share of MPF Ratings’ Gold rated schemes) and MPFA (for the average FER of MPF funds)

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