Assessment of Value 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. We have provided more detail on how we have assessed each of these areas in the methodology section of this report.

	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?

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:

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

Our conclusions

The table below shows the overall conclusion of our assessment, and it is encouraging to see that the majority of 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. Although 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.

Since last year, we completed a number of actions to improve value for investors. A full explanation of these actions has been included in our Assessment of Value report. The Board will continue to challenge the business where they feel action needs to be taken.

We hope that this Assessment of Value report provides our investors with a simple way to assess the value delivered by their funds.