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Assessment of Value Report

Matthew Higginbotham

Matthew Higginbotham
CEO HSBC Asset Management (Fund Services UK) Limited

I am pleased to publish our fifth annual Assessment of Value report. We continue to make changes to enhance the quality of the report and provide investors with a simple to understand and fair appraisal of the value delivered by our funds.

Some of the key improvements we have made to our funds and processes since last year’s report include:

Consumer Duty – Since the implementation of Consumer Duty we have continued to ensure it is embedded in our culture and strategy and that we deliver products and services that are reinforced with the Consumer Duty standards
Rationalisation of our UK fund range continues – We have restructured the Global Property Fund to invest in shares of infrastructure companies. We believe the change in investment approach has the potential to deliver improved outcomes for investors
Price and Value – We have introduced tiered pricing across several of our funds, to allow fund investors to benefit from reduced fees where further economies of scale are generated
Focus on sustainability – We have continued to work on the implementation of the FCA’s Sustainability Disclosure Requirement (SDR). By the end of 2024 we expect to confirm which funds will receive a sustainability label

For more information on these improvements and the other ways we continue to deliver value for our fund investors in the UK, please read the full report.

Read the report

About this report

The Financial Conduct Authority (FCA) provided managers with seven minimum criteria to consider when assessing the value of their funds. We took these criteria and, from an investors point of view, asked ourselves the following questions.

	Quality of service	How have our funds measured up against a series of areas that we believe are important to the overall investment experience? These include operational oversight, our investors’ experience, risk management, investment capability and our responsible investment framework.
	Performance	Have our funds and share classes achieved their performance objective and other measures within their investment policy and strategy? How does performance compare to other similar funds and share classes available from other fund managers?
	AFM costs – general	What is the breakdown of our fund charges? Are the costs of our funds and related services offering you fair value?
	Economies of scale	Are savings and benefits that we achieve through our fund’s and HSBC AM’s size and scale being shared with investors?
	Comparable market rates	How do the costs compare to the costs of other similar funds available from other fund managers?
	Comparable services	How does the fund compare to other similar funds, institutional mandates and share classes offered by HSBC with similar investment objectives and policies?
	Classes of shares	Are investors in the best share class they are eligible for? Are the points of differentiation between these share classes appropriate and justified?
We have provided more detail on how we have assessed each of these areas in the methodology section of this report.

Our ratings framework

We have used a two-tier system to conduct our Assessment of Value. Firstly, we assessed our funds and share classes against the seven minimum assessment criteria detailed in the table below and rated each of these individual assessments against a traffic light system using the following principles:

Green	Our assessment of this criteria has found that the fund/share class is delivering good value to investors for these criteria and no material issues have been found.
Amber	Our assessment of this criteria has found that the fund/share class is delivering moderate value to investors for these criteria, however, there are areas that need management action and/or oversight.
Red	Our assessment of this criteria has found that the fund/share class is delivering poor value to investors for these criteria and there are areas where management action has been or will be taken.

The following table shows each of the seven minimum assessment criteria we have used to assess our funds.

Assessment criteria for each of our funds

Overall value conclusion

Secondly, we considered all of the individual criteria assessments for each fund’s share class at an aggregated level to determine an overall value conclusion for each share class. Considering each of the seven assessment criteria equally we came up with a quantitative view of the overall value conclusion. Provided with this information, as well as other qualitative information about the funds and other quality of service considerations, the Board was able to take a measured view on the overall value delivered to investors. We used a second traffic light system and set of principles to conclude on our Board’s overall evaluation of each fund/share class. These are the ratings you will see in the two-page summaries for each of the funds:

Met	Having considered the fund’s costs, performance, and the quality of service provided to our investors, we believe that the fund is delivering good value.
Partially Met	Having considered the fund’s costs, performance and the quality of service provided to our investors, we believe that the fund is delivering value in most areas. Management action may be necessary or has already been taken and we will review its effectiveness.
Not Met	Having considered the fund’s costs, performance and the quality of service provided to our investors, we believe that the fund is not delivering value and management action has been or will be taken.

HSBC index funds (The overall value conclusion shown is for the Investment Association primary share class)	Overall value conclusion
American Index Fund
Developed World Sustainable Equity Index Fund
European Index Fund
FTSE 100 Index Fund
FTSE 250 Index Fund
FTSE All-Share Index Fund
FTSE All-World Index Fund
Japan Index Fund
Pacific Index Fund
Sterling Corporate Bond Index Fund
UK Gilt Index Fund
USA Sustainable Equity Index Fund
HSBC multi-asset funds (The overall value conclusion shown is for the Investment Association primary share class)	Overall value conclusion
Balanced Fund
Global Strategy Adventurous Portfolio
Global Strategy Balanced Portfolio
Global Strategy Cautious Portfolio
Global Strategy Conservative Portfolio
Global Strategy Dynamic Portfolio
Monthly Income Fund
World Selection – Adventurous Portfolio
World Selection – Balanced Portfolio
World Selection – Cautious Portfolio
World Selection – Conservative Portfolio
World Selection – Dividend Distribution Portfolio
World Selection – Dynamic Portfolio
World Selection – Interest Income Portfolio
HSBC sustainable multi-asset funds (The overall value conclusion shown is for the Investment Association primary share class)	Overall value conclusion
Global Strategy Sustainable Adventurous Portfolio*
Global Strategy Sustainable Balanced Portfolio*
Global Strategy Sustainable Cautious Portfolio*
Global Strategy Sustainable Conservative Portfolio*
Global Strategy Sustainable Dynamic Portfolio*
Global Sustainable Multi-Asset Adventurous Portfolio
Global Sustainable Multi-Asset Balanced Portfolio
Global Sustainable Multi-Asset Cautious Portfolio
Global Sustainable Multi-Asset Conservative Portfolio
Global Sustainable Multi-Asset Dynamic Portfolio
*Notice has been issued to the investors in the HSBC Global Strategy Sustainable Portfolios to advise that we are closing the funds with effect from 22 November 2024.
HSBC active funds (The overall value conclusion shown is for the Investment Association primary share class)	Overall value conclusion
Corporate Bond Fund
Europe Ex-UK Equity Fund
Global Property Fund
Income Fund
UK Growth & Income Fund
UK Multi-Factor Equity Fund
US Multi-Factor Equity Fund

Our conclusions

The table below shows the overall conclusion of our assessment, and it is encouraging to see that most funds and share classes deliver value. However, the report also identifies funds and share classes that are not, or that are only partially, providing value. For those funds or share classes we have detailed the actions that we have already taken, or that we commit to take, within the individual two-page fund reports.

Where we have rated a fund or share class as green, we consider that the fund’s costs, performance, and the quality of service provided, delivers good value to our investors. Whilst amber-rated funds or share classes deliver value in most areas, we believe these require more frequent review and/or some management action to be taken.

	Green	Amber	Red
Asset under Management (AUM)	£57.45bn	£258m	-
Percentage of AUM	99.5%	0.5%	-
Number of funds	42	1	-
Percentage of funds	98%	2%	-

We have made several changes this year to further improve value for investors. A full explanation of these actions has been included in our Assessment of Value report. The HSBC Asset Management (Fund Services UK) Limited Board will continue to challenge the senior management of the business where they feel action needs to be taken. We hope that this report provides investors with a simple way to assess the value delivered by their chosen funds.

Important Information

The material contained herein is for marketing purposes and is for your information only. This document is not contractually binding nor are we required to provide this to you by any legislative provision. It does not constitute legal, tax or investment advice or a recommendation to any reader of this material to buy or sell investments. You must not, therefore, rely on the content of this document when making any investment decisions.

This document is not intended for distribution to or use by any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation. This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe to any investment.

The contents are confidential and may not be reproduced or further distributed to any person or entity, whether in whole or in part, for any purpose. This presentation is intended for discussion only and shall not be capable of creating any contractual or other legal obligations on the part of HSBC Asset Management (Fund Services UK) Limited or any other HSBC Group company.

The document is based on information obtained from sources believed to be reliable but which have not been independently verified. HSBC Asset Management (Fund Services UK) Limited and HSBC Group accept no responsibility as to its accuracy or completeness. Care has been taken to ensure the accuracy of this presentation but HSBC Asset Management (Fund Services UK) Limited accepts no responsibility for any errors or omissions contained therein.

This document and any issues or disputes arising out of or in connection with it (whether such disputes are contractual or non-contractual in nature, such as claims in tort, for breach of statute or regulation or otherwise) shall be governed by and construed in accordance with English law.

Any views expressed were held at the time of preparation and are subject to change without notice. While any forecast, projection or target where provided is indicative only and not guaranteed in any way. HSBC Asset Management (Fund Services UK) Limited accepts no liability for any failure to meet such forecast, projection or target.

The value of investments and any income from them can go down as well as up and investors may not get back the amount originally invested. Where overseas investments are held the rate of currency exchange may also cause the value of such investments to fluctuate. Investments in emerging markets are by their nature higher risk and potentially more volatile than those inherent in some established markets. Stock market investments should be viewed as a medium to long term investment and should be held for at least five years. Any performance information shown refers to the past and should not be seen as an indication of future returns.

To help improve our service and in the interests of security we may record and/or monitor your communication with us. HSBC Asset Management (Fund Services UK) Limited provides information to Institutions, Professional Advisers and their clients on the investment products and services of the HSBC Group.

The Assessment of Value Report is approved for issue in the UK by HSBC Asset Management (Fund Services UK) Limited, which is authorised and regulated by the Financial Conduct Authority. HSBC Asset Management is the brand name for the asset management business of HSBC Group, which includes the Authorised Corporate Director activities provided through our local regulated entity, HSBC Asset Management (Fund Services UK) Limited’.

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Content ID: D031470; Expiry Date: 31.10.2025