The HSBC Asia Multi-Asset High Income Fund was made available to retail investors in Hong Kong on 4 January 2021.
The initial public offering period will end on 15 January 2021 and the fund will begin trading on the same day, according to Alison Brown, head of sales for wholesale business at HSBC Global Asset Management (HSBC GAM).
“In an ongoing low interest rate environment, investors are eager to seek alternative sources of income while maintaining exposure to growth opportunities, particularly as the world transitions to a post-pandemic recovery. Risk management is a key component in the investment process,” Brown said.
The product is a unit trust domiciled in Hong Kong, and could potentially be offered to mainland Chinese investors through the Mutual Recognition of Funds scheme in a year’s time provided it meets all other eligibility criteria, she said.
The annual management fee is 1.25%, and dividends will be paid monthly (although payments are not guaranteed).
Its base currency is US dollars, and share classes are also available in Hong Kong, Australian and Canadian dollars, the euro, pound sterling and renminbi.
Yield enhancement
The fund, which is benchmark agnostic, aims to capture higher income opportunities in Asia by using a multi asset approach with additional yield enhancement techniques.
These include adding higher yielding asset classes, tilting equity to higher dividend stocks and writing covered calls (to collect the option premia) on equities.
Jimmy Choong, associate director for multi-asset at HSBC Global AM, who is the manager of the fund, said: “Asia ex-Japan is the only region globally to have experienced positive GDP growth in 2020. As we step into a year of restoration, we believe Asia remains a fast-growing region with good macroeconomic fundamentals.
“Asian equities are currently trading at discount compared to the major developed markets, giving a higher capital growth potential.
“Meanwhile, with policy rates globally reaching all-time lows, Asia high yield bonds offer competitive yields and shorter duration compared to peers. In addition to yield, Asia credit also has the benefit of lower default rates, helping make the case for investing in Asia credit stronger.”
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