HSBC GIF Global Bond Total Return
Flexible approach to optimising fixed income investing
With lower-for-longer rates, tight credit spreads, lower yield and increased market volatility pushing for a reassessment of fixed income allocations, there is a rising need for innovative solutions to achieve investment objectives. Fixed income investors are significantly allocating to the flexible bond universe, which has grown to USD516 billion.
The HGIF Global Bond Total Return provides a dynamic, multi-sector, flexible approach that breaks away from traditional benchmark constraints and maximises the full fixed income investment toolkit.
The fund’s duration and credit exposures are managed dynamically, providing the versatility to capture upside opportunities and protect capital, regardless of the ever-changing economic environment.
Adopting a flexible approach to fixed income investing
Key features include:
- Investors are significantly allocating to the flexible bond universe, growing to +$516bn
- A dynamic multi-sector fixed income strategy that can be an efficient diversifier for broader fixed income allocations
- A truly global flexible approach that provides a balanced 'core' fixed income solution
- Unique, uncorrelated, differentiated strategy that captures the upside opportunities and protects capital
- Strong track record with complementary results
Why consider unconstrained multi-sector fixed income?
A challenging environment for investors
Bonds market context
Lower-for-longer rates pushing reassessment of fixed income allocations
With yields and spreads at, or close to all-time lows, the traditional fixed income investing approach is unlikely to generate strong returns going forward
Year after year, asset class returns exhibit the “first to worst” phenomenon
Solutions managed to a benchmark are bound to a high duration exposure and offer unattractive yields
Past performance should not be seen as an indication of future returns.
Source: HSBC Asset Management, Broadridge Bloomberg as of 31 December. Representative overview of the investment process, which may differ by product, client mandate or market conditions. For illustrative purposes only and does not constitute any investment recommendation in the above mentioned companies. This example is historic and should not be construed as an offer to sell or a solicitation of an offer to purchase or subscribe to any investment. Any forecast, projection or target when provided is indicative only and is not guaranteed in anyway.
Are investors adequately compensated for their core fixed income exposure?1
While income return has fallen by 50%2
Past performance should not be seen as an indication of future returns.
1. Source: Bloomberg. Index used: Bloomberg Barclays Global Aggregate Index. Data as of 31st December 2020
2. Source: Bloomberg. Index used: ICE BofA Merrill Lynch Global Broad Market Index. Data as of 31st December 2020
For illustrative purposes only and does not constitute any investment recommendation in the above mentioned companies. This example is historic and should not be construed as an offer to sell or a solicitation of an offer to purchase or subscribe to any investment. Any forecast, projection or target when provided is indicative only and is not guaranteed in anyway.
Why HSBC GIF Global Bond Total Return?
Investors are significantly allocating to the flexible bond universe, growing to +$516bn
Lower for longer rates, tight credit spreads, lower yields and market volatility has forced investors to reassess their FI allocation
Retaining sectorial investment flexibility and avoiding being locked in is key
A dynamic multi-sector fixed income strategy can be an efficient diversifier for broader fixed income allocations
Avoiding house style bias by utilising the full fixed income toolkit
Built on a short duration core, allocating to alpha credit when values are attractive
A truly global flexible approach that provides a balanced ‘core’ fixed income solution
Balancing allocations between macro and credit exposures
As a replacement for traditional ‘core’ fixed income solutions
Flexible duration approach with a range between -2 to +8 yrs
Unique, uncorrelated, differentiated strategy that captures upside opportunities and protects capital
High conviction and low volatility approach, aiming for an attractive total return over a cycle with volatility between 4-5%
Combines capital growth and income-generation capabilities
Strong track record with complementary results versus peers
Excellent long-term performance, drawdown and recovery statistics
Low correlation to existing manager allocations
A distinct approach to investing
HSBC Asset Management investment process is characterised by structure and discipline, implemented with skill by empowered and accountable teams of portfolio managers and analysts.
Strong global investment platform and operations supports local investment teams
Responsible investing is embedded in our culture and processes
We believe, ESG can have a material effect on company fundamentals, in terms of both opportunities and risks.
Source: HSBC Asset Management. For illustrative purpose only.
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.
- Exchange rate risk. Investing in assets denominated in a currency other than that of the investor’s own currency perspective exposes the value of the investment to exchange rate fluctuations
- Counterparty risk. The possibility that the counterparty to a transaction may be unwilling or unable to meet its obligations
- Credit risk. A bond or money market security could lose value if the issuer’s financial health deteriorates
- Default risk. The issuers of certain bonds could become unwilling or unable to make payments on their bonds
- Interest Rate risk. When interest rates rise, bond values generally fall. This risk is generally greater the longer the maturity of a bond investment and the higher its credit quality
- Derivative risk (leverage). The value of derivative contracts is dependent on the performance of an underlying asset. A small movement in the value of the underlying can cause a large movement in the value of the derivative. Over-the-counter (OTC) derivatives have credit risk associated with the counterparty or institution facilitating the trade. Investing in derivatives involves leverage (sometimes known as gearing). High degrees of leverage can present risks to sub-funds by magnifying the impact of asset price or rate movements
- Asset backed securities (ABS) risk. ABS are typically constructed from pools of assets (eg mortgages) that individually have an option for early settlement or extension, and have potential for default. Cash flow terms of the ABS may change and significantly impact both the value and liquidity of the contract
- Emerging market fixed income risk. As interest rates rise, debt securities will fall in value. Emerging economies typically exhibit higher levels of investment risk. Higher yielding securities are more likely to default
- Liquidity risk. Liquidity Risk is the risk that a Fund may encounter difficulties meeting its obligations in respect of financial liabilities that are settled by delivering cash or other financial assets, thereby compromising existing or remaining investor
- Contingent Convertible Security (CoCo) risk. Hybrid capital securities that absorb losses when the capital of the issuer falls below a certain level. Under certain circumstances CoCos can be converted into shares of the issuing company, potentially at a discounted price, or the principal amount invested may be lost
- Operational risk. The main risks are related to systems and process failures. Investment processes are overseen by independent risk functions which are subject to independent audit and supervised by regulators