The HSBC GIF Global Inflation Linked Bond Fund, which will be managed by the company’s fixed income team led by CIO, quantitative strategies, Charles Bertrand, will invest in the sovereign bonds of countries such as Australia, Canada, Sweden, UK, US, Japan as well as some countries in the Eurozone.
It will be managed using a quantitative approach by the team, which currently manages $2.7bn in inflation-linked bond assets. It is part of HSBC’s flagship Luxembourg-domiciled SICAV Gif range.
When launching the fund, manager Bertrand said accommodating monetary policies, combined with significant public deficits in developed economies, may lead to higher realised inflation in the next three to five years.
“In the short-term, inflation pressure is likely to derive from emerging countries’ strong economic growth, demand for commodities and currency appreciation,” he added.
“Inflation linked bonds provide the most effective hedge against inflation when compared to other asset classes, including real estate and commodities, as they are the only asset class whose return is directly adjusted to the realised rate of inflation. In addition, inflation linked bonds demonstrate low correlation to nominal bonds, diversify a fixed income portfolio and improve its overall risk-adjusted potential.”
The fund will seek to add value primarily through country allocation and is entirely hedged against currency risk. Minimum investment is $1m for institutional investors and $5,000 for retail investors, with annual management fees of 0.35% and 0.70% respectively. The fund has daily liquidity and is available in the base currencies of: EUR, GBP, HKD, SGD and USD.
