HSBC Global Asset Management is planning a UCITS III European absolute-return fund, the HSBC GIF European Alpha Equity Fund, scheduled to debut next month. The fund will use both quantitative and qualitative factors in a market-neutral strategy to invest in stocks, equity swaps and short positions in developed European nations.
The fund will aim for a volatility target of 10% to deliver returns on par with the stock market. The portfolio management team of four will be led by Vis Nayar.
The fund will employ the same strategy as HSBC’s European Alpha Fund, domiciled in the Cayman Islands. Since its April 2008 inception, that fund has outperformed the MSCI Europe Index, delivering a cumulative return of 24.7%, compared to its benchmark index’s 20.1% decline. HSBC noted that in 2008, in the midst of the financial crisis, the fund still achieved growth of 13.1%; the MSCI Europe Index fell 35% in that difficult year.
“Our existing investors know we piloted this over the past two years to complement, rather than cannibalize, our existing fund,” said Charles Robinson, global head of alternatives distribution at HSBC. “This is not simply a UCITS clone of our popular Cayman-domiciled European Alpha fund.
“Rather, it is a strategy constructed with daily liquidity in mind, greater capacity and a risk/return profile that falls somewhere between our base class and our 2.5 levered share class,” Robinson added.
The minimum investment for retail investors is $5,000. For institutional investors, it is $1 billion. HSBC has three other UCITS funds: the HSBC GIF Global Macro, HSBC GIF Global Currency and HSBC GIF Global Bond Market Neutral funds.