Asset Manager Overview
HSBC Global Asset Management is the asset management arm of, and is wholly owned by, HSBC Holdings plc (HSBC Group). The HSBC Group is one of the largest banking and financial services organisations in the world with operations in Europe, Asia Pacific, the Americas, the Middle East and Africa.
HSBC has been conducting investment management services since 1973. In 1994 HSBC Asset Management was established when HSBC's regional asset management companies were brought together into a single business with a global perspective and local expertise. The business is responsible for over $800bn of assets globally, circa 20% of this is in multi-asset strategies. The majority of the assets are managed in active strategies with just over 20% in passives.
Fund Manager/Team Overview
This fund benefits from the deep resources of HSBC's Global Multi-Asset team, who are organised regionally into five teams. This fund is managed by HSBC's 10 strong UK Multi-Asset team based in London. Lead manager on the fund is Nicholas McLoughlin and he is supported by Arthur Chevalier and Arnaud Battistella. Mr McLoughlin is Head of Managed Solutions funds and has been with HSBC since 2018.
Investment Philosophy & Process Overview
The HSBC Global Strategy fund range is designed to provide investors with a low cost set of portfolios which can be matched to a number of client risk profiles. This strategy is structured such that it is the highest fund within the range in terms of expected risk. This fund was launched in August 2017 in order to extend the Global Strategy range.
The fund's longer term asset allocation is formulated in-house based on the group's long run expectations for asset class returns and risk. Return assumptions are based on a combination of ten-year forward looking returns for each asset class and the asset class neutral return forecast, which assumes that all asset classes have the same risk-reward profile. Asset class volatility expectations are based on at least 15 years worth of historic returns data. Like some of their peers, volatility expectations take into account the fact that market returns are more likely to significantly fall than significantly rise. Asset class correlations also form part of the team's modelling process. The allocation generated from the team's modelling process is deliberately globally orientated and therefore will not allocate significantly to UK equities or bonds.
The managers will take tactical positions relative to the longer term allocation based on short to medium term views on each asset class. These views, formed by the UK Multi Asset Team, stem from the work carried out by the Global Multi Asset Team. The Global Multi Asset Team meet on a monthly basis to discuss the group's broad investment themes and establish views on each asset class and region. Views are principally informed by an in-house model which is driven by valuations and tactical signals, but a discretionary overlay is applied. Typically, the team will not look to take sizeable positions away from the longer term asset allocation, but instead attempt to enhance returns and minimise risk by moderately tilting the portfolio around it. The key driver of returns for the fund will be derived from their longer term positioning.
The portfolio will primarily comprise of holdings in HSBC's index and ETF fund range. Index futures and other derivatives securities will also be used to efficiently adjust the positioning of the portfolio. For example this could be to take exposure to a specific equity region or to adjust the overall interest rate sensitivity of the portfolio. Property exposure within the fund is limited to 10% and is gained via a global REIT ETF. For asset classes where currency risk makes up a large proportion of the overall asset class risk, exposures will be hedged back to sterling. For higher risk asset classes, currency hedging will only be conducted for tactical reasons.
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