Smart Solutions to Investment Needs:
- Diversified portfolios are the corner stone of multi asset funds’ investment principle. As HSBC, we believe in the merits of a “Multi Asset” approach while devising investment strategies for fund portfolios.
- HSBC Multi Asset Funds, the flagship of our fund range, are conceived for investors that wish to diversify their portfolios with a single investment instrument.
- Thanks to HSBC Multi Asset Funds, our clients gain swift and effective access to equity, bond, foreign exchange, and commodity markets with a single instrument.
- The distribution of assets that constitute the fund portfolio is determined to reflect HSBC’s long term investment views. The fundamental assumption underlying portfolio diversification is a decline in the price of one asset being partially or fully offset by a rise in another.
- Via increasing the number of asset classes in a fund, raising the return attainable in a given risk category to maximum levels is sought. HSBC Multi Asset Funds engage in investments not only in local but also in international markets.
- HSBC’s presence in global financial markets and local market experience provide the opportunity to incorporate foreign assets from different geographies to the portfolios of Multi Asset Funds. Our clients who invest in HSBC Multi Asset Funds capitalise on HSBC’s global knowhow and local experience.
Why is a Multi Asset approach crucial?
- It is not possible to know which asset class will perform better in the short term.
- An asset class that outperforms others in a given year may disappoint a year later. As such, it may be inferred that the return on investment in a single asset class (bond-bill, stock, gold, etc.) is more difficult to predict and displays greater volatility. As a conclusion, yield performance when investing in a single asset class is related to correct timing. Hence, it could be coincidental and may well cause disappointment.
- However, in the case of HSBC Multi Asset Funds, which command diversified portfolios and a long term investment perspective, timing is not that critical. In HSBC Multi Asset Funds, yield is determined by asset distribution; and volatility is milder in comparison to individual assets.
Our investment processes: How do we manage our funds?
Our investment objective in HSBC Multi Asset Funds is to generate capital growth in the long term through investing in a wide array of financial assets also including foreign assets. To attain this long term goal, we implement our investment processes based on pre-determined rules, with impeccable discipline. Our investment processes allow us to exploit short term market opportunities as well. Each of our Multi Asset Funds designed to suit the needs of clients at various levels of the risk continuum is managed on the basis of a designated risk budget.
We apply a “Three Stage Investment Process” in HSBC Multi Asset Funds:
1. Strategic Asset Allocation: This is the stage whereby portfolios comprising asset classes from diverse geographies and currencies are devised, with a view to realising our long term goals. The resulting asset distribution is reviewed on a quarterly basis to make sure that the funds remain consistent with their long term risk-return profile.
2. Tactical Asset Allocation: In this phase, long term Strategic Asset Allocation is revised so as to reflect our short term market views. Market opportunities that are more short term in nature are exploited in this phase. Tactical allocation in HSBC Multi Asset Funds is reviewed at least once a month under normal market conditions. However, in the event of extraordinary circumstances such as economic or political crises, more frequent reviews may be warranted.
3. Execution: In this stage, the most convenient method to attain the desired asset allocation is assessed. In HSBC Multi Asset Funds, we invest directly in Turkish Lira denominated assets. On the other hand, while investing in foreign assets, we opt for passively managed and comparatively lower cost instruments, such as ETFs and Index Funds. During the selection of ETFs and other funds, criteria such as cost and issuer quality are taken into consideration.
Advantages of multi asset funds to clients:
- A range of investment products conceived to suit different levels of risk appetite: Multi Asset Funds are investment solutions designed to address clients’ investment needs. Each fund is structured to address our clients’ varying risk profiles.
- Targeting a higher risk-return balance compared to investment in a single asset class: Multi Asset Funds target a higher return in comparison to that to be generated from a single asset class. Investments in a certain geography or asset class may at times prove excessively risky. As a case in point, bonds, which are conventionally regarded as a risk-free asset class, turned out to be among the riskiest investment instruments in 2013.
- A means of diversification across various asset classes, currencies, and geographies: Investing in Multi Asset Funds, clients have the means to invest in a variety of currencies and geographies, across global stock and bond markets, as well as in alternative markets such as commodities.
- A “Three Stage Investment Process” executed with rigorous discipline: To make sure that the devised portfolios remain compliant with specified risk restrictions and long term yield targets, investment processes are executed with strict discipline. While our strategic asset distribution constitutes the fundamental portfolio layout reflecting our long term expectations, a tactical asset allocation is performed to exploit short term market opportunities; and optimum instruments for implementation are meticulously identified by expert fund management teams.
- Cost-focused execution: We adhere to a cost-focused approach in terms of local and foreign securities trading commissions and Exchange Traded Fund fees, which are effective on clients’ net returns; and leveraging HSBC’s global reach as well as scale, we target the lowest possible cost.