HSBC Global Asset Management launches two funds in Mainland China

HSBC Global Asset Management has announced that it has launched its HSBC Asian Bond Fund and HSBC Asian High Yield Bond Fund in mainland China under the Mutual Recognition of Funds (MRF) scheme.

The launch of the two Funds complements the HSBC Asia High Income Bond Fund launched in April 2020, says the Bank in a press release, by providing mainland Chinese investors with a range of Asian fixed income funds – supporting a range of different risk appetites and investment preferences against the current market backdrop.

Distributing share classes of both funds target to pay monthly dividends to generate an income stream (dividend is not guaranteed and may be paid out of capital). The HSBC Asian Bond Fund seeks to achieve a reasonably high income while maintaining a prudent policy of capital conservation, primarily through investments in fixed interest securities, including investment grade bonds, within the Asian region.

The HSBC Asian High Yield Bond aims to achieve higher level of income and capital appreciation primarily through investments in a diversified portfolio of higher-yielding fixed income securities including investment grade, non-investment grade, and unrated bonds in the Asian markets.

Alison Brown, Head of Sales, Wholesale Business, HSBC Global Asset Management, said: “We know that some mainland Chinese investors are looking for overseas investment to diversify their portfolio in the currently volatile market. We are delighted to leverage MRF northbound scheme to provide them with a suite of Asian fixed income funds, each with different risk profiles.”

“We believe the introduction of these three funds will enable mainland investors to select a strategy which is aligned to their personal investment needs and objectives, as well as potentially diversifying their fixed income holdings. As a leading global asset manager, HSBC Global Asset Management will continue to look for opportunities to broaden distribution in mainland China and offer investment solutions by capitalising on our expertise,” Brown continued.

Asian bond market demonstrates resilience against market volatility

Although the recent market has been characterised by heightened volatility, the fundamentals of the Asian credit market remain solid, says HSBC.

Cecilia Chan, Chief Investment Officer, Fixed Income, Asia-Pacific, HSBC Global Asset Management and Fund Manager, HSBC Asian Bond Fund, said: “The extraordinary level of stimulus policies deployed by Asian governments in the shape of both fiscal and monetary easing bolsters the stability of the Asian bond market against the current market backdrop. The fundamentals of Asian corporates are expected to outperform many global peers and we expect the default rate to be maintained at a lower level.”

“In addition, the low correlation with other asset classes should make Asian bonds an integral part of investors’ portfolios. Leveraging on the long track record of the HSBC Asian Bond Fund and the expertise of our experienced fixed income investment team in Asia, we believe the HSBC Asian Bond Fund can help meet investors’ needs for capital conservation and diversification while potentially generating a reasonably high income stream,” added Chan.

Established in 1996, the HSBC Asian Bond Fund adopts a prudent investment strategy that invests in a relatively low-risk portfolio primarily made up of fixed interest securities including investment grade bonds in Asia.

Attractive opportunities found in Asian high yield bonds

Alfred Mui, Head of Asian Credit, HSBC Global Asset Management and Co-Fund Manager, HSBC Asian High Yield Bond Fund, said: “The average yield of an Asian High Yield bond is currently trading around 9%2 – a return that is appealing to investors. While the impact of the current situation on the global economy this year is to be evaluated, the good news is that central banks around the globe are providing sufficient liquidity to support the market and many Asian corporates are maintaining ample cash flow, which will help offset potential systemic default risk. We believe Asian high yield looks attractive when we strike a balance between investment opportunities and risks, and in combination with strong credit selection processes.”

“For investors who are seeking potentially higher return in a low interest rate environment, the HSBC Asian High Yield Bond Fund is well positioned to help them capture potential income and growth through investments in a diversified portfolio, mainly composed of higher yielding bonds,” continued Mui.

The HSBC Asian High Yield Bond Fund has been consistently ranked in the 1st quartile of its peer group by Morningstar in 3-month, 6-month, 1-year, 3-year and 5-year categories. This fund adopts a flexible and diversified approach to investing primarily in high yield and unrated bonds.

HSBC Jintrust Fund Management Co. Ltd serves as the master agent of the HSBC Asian Bond Fund and HSBC Asian High Yield Bond Fund in mainland China and they will initially be distributed through HSBC Bank (China) Company Limited and subsequently by other onshore distributors, said the Bank.

The introduction of these two funds brings the total number of Asian bond funds offered to mainland Chinese investors by HSBC Global Asset Management, under the MRF, to three.