HSBC GIF Multi-Asset Style Factors
Diversified strategy designed to provide long-term total return with a low correlation to traditional asset classes
Our philosophy
- Multi-asset factor investing is the third generation of portfolio construction after balanced portfolios
- A factor-based approach implies a better understanding of the drivers of a portfolio risks and returns (between assets and within an asset class). It enables investors to manage risk, improve returns and achieve greater diversification
- Style factors are weakly correlated with traditional asset classes and represent a new source of potential return and diversification for investors in a context of low expected returns
Why Multi-Asset Style Factors?
- Well diversified (across styles and asset classes): it has no structural exposure to any asset class hence is weakly correlated to traditional balanced portfolios
- Our approach is focused and disciplined. We have selected three well-established and robust style factors that have been delivering persistent risk premia across equity, bond and currency markets. The investment process is systematic and transparent. There is no manager intervention to tilt the portfolio away from this systematic approach
- The investment strategy is implemented at the aggregate level using highly liquid derivatives only
Our process
Uses a systematic approach which aims to capture three robust style premia (value, momentum and carry) across three asset classes (equity, bond and currency) through nine customised style portfolios. Each style portfolio combines long and short positions, to capture the style premium in its "purest" form. The allocation of each style portfolio derives from the ranking of the investment universe on a defined metric: the style portfolio is long the better ranked assets, while being short the lower ranked.
The nine style portfolios are then combined to maximise diversification across styles and asset classes, with no factor timing.
The strategy is implemented using highly liquid derivatives only. Only one portfolio is actually implemented, once all style portfolios positions have been netted.
HSBC strengths
- At HSBC Asset Management, we entered the market in the early 2000s and propose factor investing alongside our more traditional investment strategies in equity, fixed income and Multi-Asset
- Strong research teams and proprietary portfolio construction tools support the investment team decision making
Key risks
It is important to remember that the value of investments and any income from them can go down as well as up and is not guaranteed.
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.
Derivatives Risk: Derivatives can behave unexpectedly. The pricing and volatility of many derivatives may diverge from strictly reflecting the pricing or volatility of their underlying reference(s), instrument or asset.
Emerging Market Risk: Investments in Emerging Markets are by nature higher risk and are potentially more volatile than those made in developed countries. Markets are not always well regulated or efficient and investments can be affected by reduced liquidity.
Equity Risk: Portfolios that invest in securities listed on the stock exchange or market could be affected by general changes in the stock market. The value of investments can go down as well as up due equity market movements.
Exchange Rate Risk: Changes in currency exchange rates could reduce or increase investment gains or investment losses, in some cases significantly.
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.
Investment Leverage Risk: Investment Leverage occurs when the economic exposure is greater than the amount invested, such as when derivatives are used. A Fund that employs leverage may experience greater gains and/or losses due to the amplification effect from a movement in the price of the reference source.
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 investors.
Model risk: Model risk occurs when a financial model used in the portfolio management or valuation processes does not perform the tasks or capture the risks it was designed to. It is considered a subset of operational risk, as model risk mostly affects the portfolio that uses the model.
Operational Risk: Operational risks may subject the Fund to errors affecting transactions, valuation, accounting, and financial reporting, among other things.
For more detailed information on the risks associated with this fund, investors should refer to the prospectus of the fund.
Important information
For Professional Clients only and should not be distributed to or relied upon by Retail Clients.
HSBC GIF Multi-Asset Style Factors is a sub fund of HSBC Global Investment Funds, a Luxembourg domiciled Société d'investissement à Capital Variable (SICAV). UK based investors in HSBC Global Investment Funds are advised that they may not be afforded some of the protections conveyed by the provisions of the Financial Services and Markets Act 2000. HSBC Global Investment Funds is recognised in the United Kingdom by the Financial Conduct Authority under section 264 of the Act. The shares in HSBC Global Investment Funds have not been and will not be offered for sale or sold in the United States of America, its territories or possessions and all areas subject to its jurisdiction, or to United States Persons. All applications are made on the basis of the current HSBC Global Investment Funds Prospectus, Key Investor Information Document (KIID), Supplementary Information Document (SID) and most recent annual and semi-annual reports, which can be obtained upon request free of charge from HSBC Global Asset Management (UK) Limited, 8 Canada Square, Canary Wharf, London, E14 5HQ. UK, or the local distributors. Investors and potential investors should read and note the risk warnings in the prospectus and relevant KIID and additionally, in the case of retail clients, the information contained in the supporting SID.
The funds or securities referred to herein are not sponsored, endorsed, or promoted by MSCI, and MSCI bears no liability with respect to any such funds or securities or any index on which such funds or securities are based. The Supplement to the Prospectus contains a more detailed description of the limited relationship MSCI has with HSBC ETFs plc and any related funds.
HSBC GIF Multi-Asset Style Factors is actively managed and invests in Illiquid assets. The fund may use derivatives for the purposes of efficient portfolio management i.e. to meet the investment objective of the Fund and it is not intended that their use will raise the overall risk profile of the Fund. Please note derivative instruments may involve a high degree of financial risk. These risks include the risk that a small movement in the price of an underlying security or benchmark may result in disproportionately large movement; unfavourable or favourable in the price of the derivative instrument; the risk of default by counterparty; and the risk that transactions may not be liquid.
y