Global High Income Bond

The HSBC GIF Global High Income Bond Fund focuses on income generation. The fund aims to deliver a combination of sustainable income and capital appreciation by seeking the best investment opportunities across fixed income global markets.

Our approach

The fund is based on a disciplined, active management approach, backed by proprietary research. Our bespoke benchmark has been constructed to offer a broad range of opportunities with a potentially attractive combination of return and risk.

1. Outside the box

The fund focuses on bonds in the “crossover space” between investment grade and high yield. BBB and BB-rated bonds provided investor with more attractive risk-adjusted returns for a portfolio with an overall average investment grade credit rating.

2. Global diversification

The lead fund manager allocates assets across the US, Europe, Emerging markets and ABS sleeves. Individual sleeves are managed by HSBC’s expert portfolio managers based locally across the globe who position the portfolio across countries, issuers and sectors.

3. Research-driven, risk-aware

HSBC’s global credit platform leverages our geographic reach for direct access to experienced global teams of fund managers and credit research analysts. Identifying, pricing and combining risks is at the core of our investment approach.

HSBC’s strengths

With over 170 professional investors – including 45+ credit analysts globally – and 150USD billion in fixed income assets under management as at September 2023, we are able to connect UK investors with fixed income opportunities, in most geographies and across all market segments

Why consider choosing this fund?

• A clear focus on income generation and capital appreciation over the long term
• A broad investment universe: the fund invests globally, on both investment grade and high yield bonds, leveraging our expertise in each of these market segments
• Cost-effective: a convenient and cost-effective way to invest in higher yielding securities
• Daily valuations and liquidity
• Income can be distributed monthly: the fund has monthly distribution share classes

Key risks:

The value of an investment in the portfolios and any income from them can go down as well as up and as with any investment you may not receive back the amount originally invested.

• Credit risk: issuers of debt securities may fail to meet their regular interest and/or capital repayment obligations. All credit instruments therefore have potential for default. Higher yielding securities are more likely to default.
• 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.
• Interest rate risk: as interest rates rise debt securities will fall in value. The value of debt securities is inversely proportional to interest rate movements
• Emerging market risk: emerging economies typically exhibit higher levels of investment risk. Markets are not always well regulated or efficient and investments can be affected by reduced liquidity.
• Asset backed securities (ABS) risk: ABS are typically constructed from pools of assets (e.g. 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.
• Derivatives (leverage) the use of derivatives instruments can involve risks different from, and in certain cases greater than, the risks associated with more traditional assets. The value of derivative contracts is dependent upon the performance of underlying assets. A small movement in the value of the underlying assets can cause a large movement in the exposure and value of derivatives. Investment leverage (gearing) can result from using derivatives for investment purposes, where the gross market risk of the portfolio is greater than the value of its net assets. When this happens the portfolio can go up/down by more than expected relative to the performance of the markets/assets the fund is invested in. Unlike exchange traded derivatives, over-the-counter (OTC) derivatives have credit and legal risk associated with the counterparty or the institution that facilitates the trade.
• 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.