HSBC Global Asset Management has announced the launch of the HSBC GIF Global Bond Market Neutral Fund, aimed at institutional investors.
HSBC Global Asset Management has announced the launch of the HSBC GIF Global Bond Market Neutral Fund, aimed at institutional investors.
The fund invests in the 11 largest OECD government bond markets and corresponding currencies, with exposure to the different asset classes mainly being achieved through the use of financial derivative instruments.
The fund aims to outperform the money markets over the medium to long term, with an average annual volatility level of between three and 4.5 per cent.
Managed by Sinopia, the quantitative specialist of HSBC Global Asset Management, the fund is structured as a Luxembourg-based Sicav within HSBC’s flagship global investment funds range. Based in euro, investors can also subscribe in a range of other currencies including GBP, SGD, USD, AUD, CAD and PLN.
Sinopia has operated a global bond market neutral strategy since March 2001, when it launched its first mutual fund. As at March 2009, Sinopia managed USD2.8bn in this strategy.
Jean-Charles Bertrand, global head of fixed income and absolute return strategies at Sinopia, says the global bond market neutral strategy generates performance through two uncorrelated drivers. The first driver is a combination of long positions in the government bond markets identified as the most undervalued, and short positions in the markets believed to be most overvalued, whilst holding the duration within the portfolio at virtually zero. Second, active foreign exchange management provides a currency overlay by taking long and short positions in these countries’ currencies, determined by Sinopia’s proprietary currency valuation models.
Barbara Rupf Bee, global head of institutional sales at HSBC Global Asset Management, says: ‘The global bond market neutral strategy provides a source of alpha diversification relative to other hedge funds and absolute return strategies. This strategy has for some time generated interest due to its minimal credit and liquidity risk. As a result, HSBC Global Asset Management has made it accessible to our clients via the Ucits III fund format.’
Minimum investment for the institutional share class in the fund is USD1m. There is a 0.70 per cent annual management charge and the fund carries a performance fee of 20 per cent above the capitalised Eonia rate.
