A guide to mutual fund fees in Hong Kong
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A guide to mutual fund fees in Hong Kong

22 Jun
21 Mar
3 min read
"If fees consume more than 1% of your assets annually, you should probably shop for another advisor."

- The Intelligent Investor
(1949) by Benjamin Graham, Warren Buffett's professor and mentor

Are you overpaying? High fees eat into your investment returns

Time and time again, fees have been proven to be one of the key determinants of long-term returns. In fact, Morningstar research has shown that fund fees are proven the best predictor of fund returns, pointing investors to better outcomes and load-adjusted returns.

Yet, most investors are surprisingly clueless on how much in fees they pay on investment products that over the long run could amount to hundreds of thousands of dollars. Can you think of any other products or services where you have no idea what they cost?

Fees can vary greatly between different mutual funds or unit trusts, different share-classes of the same funds, or even buying the same fund via different banks or brokers. Bottom line is: You can't control where the markets go, but you can control how much you pay in fees.

A $100,000 investment in a fund earning 7% per annum (a good return), but with a fee of 1.75% versus 0.75%, will deprive you of about 152% in returns (or $152,000) over 30 years.

Chart: How fees impact your investment returns. An illustration of $100,000 invested in a fund with a gross annualised return of 7% p.a. With a 1% p.a. difference in fees, over a 30-year period, the difference in returns is more than 152% or $152,000. Source: Endowus Research.

A list of potential fees when investing in mutual funds in Hong Kong

Here are some common types of fees that investors should look out for when investing in unit trusts or mutual funds in Hong Kong:

Subscription Fee

Typically 1.5% -5% in Hong Kong

Subscription fee (also called Front load fee, Upfront fee, Front-end sales load or Initial sales charge), is a fee payable by you to the bank, financial advisor or broker selling the fund. This is charged as a percentage of your investment amount and should be negotiated.

Platform Fee

Typically 0.2-2% p.a. in Hong Kong

Platform fees, or account fees, are generally charged by online platforms and increasingly by banks and other financial advisors for administration of your investments and use of their platform. This is charged as a percentage of the market value of your portfolio, which may or may not also cover trading costs within the account, investment advice and other investment services. Make sure you know what you are getting for the wrap fee, and do not have to pay other fees on top that you thought were included.

Switch Fee

Typically 0.5-1% of your investment amount in Hong Kong

Fee charged when you switch from one fund to another. This is common when you invest in mutual funds via banks. You really should not have to pay this, ever.

Redemption Fee

Typically 1-5% of your investment amount in Hong Kong

Fee payable whenever you sell or redeem a fund. Some funds progressively reduce the redemption fee if you hold your investment over a longer period of time. Also less common these days, but still exists for some retail investment products.

Expense Ratio, Ongoing Charges or Management Fee

Typically 1-3% p.a. for retail share classes available in Hong Kong

An annual fee the funds will charge for fund expenses, including management fees, administrative fees, and operating costs. Smaller funds typically charge a significantly higher total expense ratio as they do not enjoy the same economies of scale as bigger funds.

This is deducted from a fund's net asset value (NAV), and accrued on a daily basis.

This is the only fee that institutional investors pay, and it is typically a fraction of what retail investors pay. For example, the same fund with both institutional and retail share classes will charge institutional investors ~0.50% and retail investors anywhere between 1-3%.

Trailer Fee

Typically 50-60% of the fund’s expense ratio in Hong Kong

This is a scary one. The elusive recurring distribution commission is paid by the fund management company to the bank, financial advisor or broker that sold you the fund. This fee is paid as long as you hold the fund in your portfolio. This means that you're not able to see this fee directly - you will only see it as a reduction in the net asset value (NAV) of the fund and as some part of the expense ratio the fund manager is charging you. 

You can read more about trailer fees in our article.

Low, fair fees with Endowus keep more of your returns

Fees are important to your investment returns. On Endowus, individuals get institutional access to high-performing funds at significantly lower, fair, and transparent fees.

The all-in Endowus Fee is a per-annum fee based on the value of assets you hold with Endowus. We do not charge a sales fee, transaction fee, or any other hidden fees, unlike other platforms. You also get 100% Cashback on all commissions, known as trailer fees — we have returned more than US$4.5 million in these fund-distributor commissions (as of January 2023) to our Singapore clients since inception.

Endowus is an independent wealth advisor paid solely by its clients, which ensures our advice is unaffected by any conflicts of interest. Unlike other platforms, we do not collect trailer fees, which eat into your returns and wrongly incentivise other advisors and platforms to sell certain funds that may not be suitable for you. This reduces our costs to a fraction of the industry average, which then translates to better returns for you in the long term.

For more information on our transparent fee structure, click here. To get started with Endowus HK today, follow this link.


Risk Warnings

Investment involves risk. Past performance is not an indicator nor a guarantee of future performance. The value of investments and the income from them can go down as well as up, and you may not get the full amount you invested. Rates of exchange may cause the value of investments to go up or down. 

This article is not intended to be relied upon as a forecast or research or investment advice, and should not form the basis of any investment or other decisions. The information contained herein is not intended, and should not be construed, as any legal, tax, regulatory, accounting or financial advice. If you would like investment, accounting, tax or legal advice, you should consult with your own professional advisors regarding your individual circumstances and needs.

The information in this article may not be suitable for all investors. You are responsible for any action that you take or decision that you make in reliance on any content in this article, and you agree that Endowus HK Limited (“Endowus”) is not liable under any circumstances.

No invitation or solicitation

Neither the information, nor any opinion, contained in this article constitutes a recommendation, offer or solicitation  by Endowus or its affiliates to you to buy or sell any securities, collective investment schemes or other financial instruments or services, nor shall any such security, collective investment scheme, or other financial instruments or services be offered or sold to any person in any jurisdiction in which such offer, solicitation, purchase, or sale would be unlawful under the securities laws of such jurisdiction. 

This is not intended to be an invitation or offer made to the public to subscribe for any financial product or to enter into any transaction.

Accuracy of Information

Whilst Endowus has made reasonable efforts to provide accurate and timely information, there may be inadvertent delays, omissions, technical or factual inaccuracies or errors in any such information. Endowus does not warrant or represent that the information in this article is correct, accurate or reliable. 


Any opinion or estimate above is made on a general basis and none of Endowus, nor any of its affiliates, representatives or agents have given any consideration to nor have made any investigation of the objective, financial situation or particular need of any user, reader, any specific person or group of persons. Opinions expressed herein are subject to change without notice.  

Any forward-looking statements, prediction, projection or forecast on the economy, stock market, bond market or economic trends of the markets contained in this article are subject to market influences and contingent upon matters outside the control of Endowus and therefore may not be realised in the future. 

In presenting the information above, none of Endowus, its affiliates, directors, employees, representatives or agents have given any consideration to, nor have made any investigation of the objective, financial situation or particular need of any user, reader, any specific person or group of persons. Therefore, no representation is made as to the completeness and adequacy of the information to make an informed decision. You should carefully consider whether any investment views and products/ services are appropriate in view of your investment experience, objectives, financial resources and relevant circumstances.

This article has not been reviewed by the Securities and Futures Commission of Hong Kong.

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