16 Mar 2010
HSBC Global Asset Management is to launch an equity market neutral UCITS fund that will invest in developed European markets primarily through equities and equity swaps. It is HSBC’s fourth single manager UCITS fund and comes amid unprecedented growth in onshore absolute return investment strategies
The HSBC GIF European Alpha Equity Fund will launch on April 8. It will have daily liquidity and target equity-like returns with a maximum annualised volatility target of 10% with minimal correlation to European equities.
The four-strong team that manages both the UCITS and the Cayman domiciled funds is led by senior portfolio manager Vis Nayar. The strategy was incubated within European Alpha from April 2008 and returned a total of 24.7% in Euro currency terms to the end of February based on a gross exposure of 200%. It has generated performance on both the short and long books and in 2008 the sub-fund returned 13.1% when the MSCI Europe index fell 35%.
The minimum investment in the new fund is $5,000 for the retail share class and $1 million for the institutional share class with respective annual management fees of 1.5% and 1%. The performance fee is 20% over one month Euribor for both share classes.
In a universe of about 700 stocks, the portfolio managers will look to exploit fundamental equity pricing anomalies using complementary quantitative and qualitative strategies. The fund will use more short positions to diversify risk, holding about 80 stocks, typically split between 35 long and 45 short.
It is part of HSBC Global Asset Management’s Luxembourg-domiciled Global Investment Funds range, which is distributed in around 35 countries. The new fund adds to HSBC’s UCITS funds platform, which already includes the HSBC GIF Global Macro, HSBC GIF Global Currency and the HSBC GIF Global Bond Market Neutral funds.
Deutsche Bank estimates that there are around 265 single manager hedge funds operating with a UCITS wrapper running $47 billion in assets. Rapid growth is expected to see the number of managers using the UCITS structure surpass 400 by the fourth quarter of 2010.
The HSBC GIF European Alpha Equity Fund will launch on April 8. It will have daily liquidity and target equity-like returns with a maximum annualised volatility target of 10% with minimal correlation to European equities.
“This is not simply a UCITS clone of our popular Cayman domiciled European Alpha fund,” said Charles Robinson, Global Head of Alternatives Distribution, at HSBC Global Asset Management. “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 2.5x levered share class. While it is the same team and the same philosophy, it does differ as the low correlation with the existing fund reveals.”
The four-strong team that manages both the UCITS and the Cayman domiciled funds is led by senior portfolio manager Vis Nayar. The strategy was incubated within European Alpha from April 2008 and returned a total of 24.7% in Euro currency terms to the end of February based on a gross exposure of 200%. It has generated performance on both the short and long books and in 2008 the sub-fund returned 13.1% when the MSCI Europe index fell 35%.
The minimum investment in the new fund is $5,000 for the retail share class and $1 million for the institutional share class with respective annual management fees of 1.5% and 1%. The performance fee is 20% over one month Euribor for both share classes.
“This launch … appears timely as the market backdrop seems more conducive to our market neutral strategy than the liquidity fuelled environment that defined most of 2009,” Robinson said. “This UCITS strategy builds upon the same principles of HSBC’s flagship European Alpha Fund. Our existing investors know we piloted this over the past two years to complement, rather than cannibalise, our existing fund.”
In a universe of about 700 stocks, the portfolio managers will look to exploit fundamental equity pricing anomalies using complementary quantitative and qualitative strategies. The fund will use more short positions to diversify risk, holding about 80 stocks, typically split between 35 long and 45 short.
It is part of HSBC Global Asset Management’s Luxembourg-domiciled Global Investment Funds range, which is distributed in around 35 countries. The new fund adds to HSBC’s UCITS funds platform, which already includes the HSBC GIF Global Macro, HSBC GIF Global Currency and the HSBC GIF Global Bond Market Neutral funds.
Deutsche Bank estimates that there are around 265 single manager hedge funds operating with a UCITS wrapper running $47 billion in assets. Rapid growth is expected to see the number of managers using the UCITS structure surpass 400 by the fourth quarter of 2010.
