HSBC Global Asset Management has launched the GIF Global Short Duration High Yield Bond Fund, which seeks high yield income whilst minimising interest rate risk.
The Luxembourg-domiciled UCITS fund is managed by Mary Bowers, who is part of HSBC’s New York based fixed income team. She is supported by specialist sleeve managers (US and Eurozone), helping to ensure an active top down management combined with the full benefits of local specialised resources and processes.
The portfolio typically holds 70-100 high yield bonds with final maturity or expected call dates within three years, selected from a core universe of US and European corporates, rated an average of BB or BBB.
At least 90% of the bonds are denominated into USD or hedged into USD, with up to 10% other currency exposure. Internal HSBC Global Asset Management restriction, not detailed in the prospectus. The benchmark used is the Bank of America Merrill Lynch 1-3 Year BB-B US and Euro Non-Financial High Yield 2% Constrained (USD hedged) Index.
Bowers says: “Despite the current low growth environment, US and Eurozone high yield corporate fundamentals generally remain healthy and high yield defaults are relatively stable. While the uncertainly over Quantitative Easing tapering may keep markets volatile, we believe that credit spreads can fall back, especially in BBB and high yield areas of the market. Current volatility could provide an opportunity to reallocate risk by rotating between segments and regions and by increasing exposure selectively.”
Minimum investment in the HSBC GIF Global Short Duration High Yield Bond Fund is USD5,000 for the wholesale share class, which carries an ongoing charge (including administration) of 1.15%. The institutional share class, available at USD1m, carries ongoing charges of 0.45% including the administration fee.