UK

HSBC Globa Asset Management Launches Global Bond Market neutral UCITS FUND

Published: 21 April 2009

HSBC Global Asset Management this month launches 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 3 per cent 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 (GIF) 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 successfully (1) since March 2001, when it launched its first mutual fund. As at March 2009, Sinopia managed USD2.8 billion in this strategy.

Jean-Charles Bertrand, Global Head of Fixed Income and Absolute Return Strategies at Sinopia, said 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, said the Global Bond Market Neutral strategy provided an attractive investment diversification for the fixed income allocation of institutional investors with a three-to five-year time horizon.

In particular, strong relative movements in global bond and currency markets have generated significant disparities/mispricings, which presented strong opportunities. The strategy is not penalised by low yields, nor by a future change in bond market direction.

She added: "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 HSBC GIF Global Bond Market Neutral fund is US$1m. 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 (Euro OverNight Index Average) (2).

Media enquiries to:
Jenne Mannion on +44 20 7024 0444
jenne.mannion@hsbc.com

Jane Crookbain on +44 0 207 024 0412
Jane.crookbain@hsbc.com

Notes to editors:

Photo available upon request

1) Over the period since inception on 28 June 2001 to 30 December 2008, Sinopia's Representative Global Bond Market Neutral strategy has delivered a return of 34.53 per cent compared to the Euribor 1 Month return of 26.51 per cent over the same period, according to Bloomberg. Returns are based on EUR with target average annual volatility of 3 per cent-4.5 per cent, net of management fee of 1 per cent and performance fee of 20 per cent above Euribor. Any performance information contained in this document refers to the past and should not be seen as a guide to future returns.

2) The performance fee is based on equivalent money market rates for other currencies. For example, Yen: Domestic Yen Interest Rates Call; US dollar: Fed Funds Effective rate; GBP: Sonia.

HSBC Global Asset Management

HSBC Global Asset Management comprises four specialist businesses: Halbis, Sinopia, Multimanager and Liquidity. HSBC Multimanager and HSBC Liquidity are global business units which are part of HSBC Global Asset Management. Halbis Capital Management ('Halbis') and Sinopia Asset Management ('Sinopia') are legally established as separate companies. HSBC Global Asset Management manages assets of US$ 375.04 billion (as at end January 2009). Through its network of offices in over 20 countries around the world, HSBC Global Asset Management develops strong relationships with corporates, institutions and financial intermediaries of all sizes and types. HSBC Global Asset Management acts as the global representative of its specialist investment businesses. HSBC Global Asset Management is part of HSBC Global Banking and Markets, a division of HSBC Holdings plc. For more information seewww.assetmanagement.hsbc.com

Sinopia

Sinopia is the specialist in quantitative investment solutions for the HSBC Group, with a network of offices in Europe and Asia. It has assets under management of USD28.8 billion (at end January 2009).For further information please visit: www.sinopia-group.com

HSBC Holdings plc

HSBC Holdings plc, the parent company of the HSBC Group, is headquartered in London. The Group serves customers worldwide from around 9,500 offices in 86 countries and territories in Europe, the Asia-Pacific region, the Americas, the Middle East and Africa. With assets of US$2,527 billion at 31 December 2008, HSBC is one of the world's largest banking and financial services organisations. HSBC is marketed worldwide as 'the world's local bank'.