HSBC introduces Sterling hedging for listed fund of hedge funds
HSBC has re-classified the shares in its listed FoHF, HSBC Global Absolute Limited (HGAL), to US Dollar Shares and Sterling Hedged Shares.
Effective 30 November 2004, HGAL is now offering investors the opportunity to participate in the returns of the Sterling shares of HGAL without the risk of currency fluctuations.
HGAL, launched in November 2001, is a closed-ended Guernsey incorporated company with a primary listing on the London Stock Exchange. Its investment objective is to seek to achieve equity-like returns with lower levels of volatility by investing in a diversified portfolio of hedge funds that invest in markets worldwide.
At the time of HGAL's launch, it was decided that no currency hedging would be effected. Subsequent weakening of the US Dollar/Sterling exchange rate has adversely affected the performance since the underlying holdings in the portfolio are US Dollar denominated; from November 2001 to October 2004, the net asset value per share rose 13.8% in US Dollar terms, but fell 12.8% in Sterling terms.
Paul Dunning, chief executive, HSBC Republic Investments Limited, said: "Since the launch of HSBC Global Absolute Limited in 2001, US Dollar investors have benefited from positive investment returns but Sterling investors have suffered as a result of currency fluctuations, despite a successful discount mechanism that has ensured the company's shares traded close to its net asset value.
Dunning added: "The new Sterling hedged shares will provide Sterling currency investors with an attractive opportunity, as HGAL provides daily liquidity as well as access to some of the world's top performing hedge fund managers. The diversified portfolio of hedge funds makes this an ideal choice for investors interested in alternative investments from a low risk perspective. This combination provides confidence to investors seeking exposure to hedge funds through a closed-ended investment company."
Background Note: As a member of the HSBC Group, and operating within the HSBC Private Bank (the Group's international private banking business) network, HSBC Republic Investments Limited is the dedicated investment adviser to the HSBC Group's fund of hedge funds business. HSBC Private Bank provides private banking and trustee services to high net worth individuals and their families through 42 locations in the Americas, the Asia-Pacific region, Europe and the Middle East. It had client assets under management in excess of USD 19 billion at 30 June 2004.
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