hsbc global strategy portfolios · 2019-04-15 · portfolio objective aims to provide capital...
TRANSCRIPT
HSBC Global Strategy PortfoliosQ1 2019 - Asset Allocation Breakdown
For professional clients only
Performance information above refers to the past and should not be seen as a guide to
the future.
1
Active management
Active investment funds aim to outperform a
benchmark/index by analysing the market and then
investing where the fund manager believes there is the
greatest potential for outperformance.
Key benefits:
Access to expert teams of analysts and fund managers
Potential for higher-than-index returns
Ability to react to market conditions
Poor performing companies can be identified and avoided
Disadvantages:
Reliant on the skill of the fund manager to make good
investment choices or to follow a sound investment
strategy
Risk of underperformance as active management may not
always outperform its benchmark index, particularly after
fees
Charging information:
Active management typically commands higher fees and
can generate more transactional costs than passively
managed investments
HSBC Global Strategy Portfolios
Fulfilment strategy
We believe that asset allocation is the key driver of returns and that fulfilment (i.e. the selection of funds and other investment
vehicles to take exposure to the different asset classes) should aim to capture the characteristics of each market on a cost-efficient
basis
Fulfilment focuses primarily on passive strategies, such as index tracking funds and exchange traded funds (ETFs), in order to keep
investment costs to a minimum
Below we explain the different fulfilment strategies for the HSBC Global Strategy Portfolios
Passive management
Traditional passive investment funds (including index
tracker funds and ETFs) aim to simply track the
performance of a market capitalisation weighted index.
The fund manager invests in accordance with a pre-
determined strategy that does not involve any
forecasting.
Key benefits:
Low cost access to market returns
No material risk of underperformance relative to
the index
Simple and transparent
Diversified – gains exposure to all stocks in an index
Disadvantages:
Receives only “market” performance as it is dictated by
the index, i.e. no potential for outperformance
Undervalued securities cannot be identified
The requirement to invest in a poor stock just because it
is in the index
No periodic rebalancing of index
Overvalued stocks can become an increasingly large
share of index as most indices are based on market
capitalisation i.e. the weight of a stock in the index is
based on its price
Takes no views on company prospects or direction
of market
Charging information:
Typically lower operating expenses and fees than active
management
2
1. Robust asset allocation
Asset allocation construction is a core competency of the
multi-asset team. Our team create the strategic asset
allocations by using HSBC’s tried-and-tested quantitative
methodology and review them on, at least, an annual basis by
re-running the process. There is also a qualitative overview
built into the process. These frequent reviews and the
resulting adjustments to allocations ensure that the HSBC
Global Strategy Portfolios remain in line with their long-term
risk profiles and that each fund’s long-term risk profile is not
compromised due to changes in the market environment.
2. Low overall investment costs
Asset allocation is the key driver of investment performance.
Therefore, our aim is to capture the asset allocation well and
in a cost-efficient manner. Passive investment is usually the
best way to achieve this. This is the reason why in the HSBC
Global Strategy Portfolios, our focus is on using passive
investment approaches when implementing asset allocation.
We have a preference for HSBC tracker products as we can
typically access them at zero management fees. This enables
us to offer the HSBC Global Strategy Portfolios at OCFs
ranging from only 0.16% to 0.21% (as at the end of March
2019).
3. Global diversification
Through a single investment solution, the portfolios are well
diversified across global equities, global bonds and global real
estate securities.
HSBC Global Strategy Portfolios
Reasons to invest
4. Ongoing reviews of portfolio positioning
Our fund positions are reviewed on a daily basis to ensure
actual allocations are in line with intended asset class weights.
5. Risk tolerance based on end-customer research
We undertook extensive research to evaluate fully the risk
attitude of each of various customer types. Customer needs
were reviewed in cooperation with an external consultant and
the HSBC Global Strategy Portfolios were constructed to
deliver to these risk profiles.
6. Strong governance
The HSBC Group employs strong governance across all
investment vehicles so when we include an HSBC product in
the HSBC Global Strategy Portfolios we can be sure that our
high standards of governance are being met. And, when we
use products from other providers, we employ the same high
standards of due diligence.
The HSBC Global Strategy Portfolio range is designed to meet investors’ needs in the following ways:
Dynamic strategic and tactical asset allocation to add
value –not a ‘set and forget’ approach to asset allocation
Cost efficiency by minimising fees, but also via portfolio
construction
Focus on risk management through a choice of five risk-
profiled portfolios
Well-resourced and experienced team benefiting from a
strong global investment platform
3
Portfolios asset allocation
GS
Cautious
GS
Conservative
GS
Balanced
GS
Dynamic
GS
Adventurous
Asset class (%) SAA TAA SAA TAA SAA TAA SAA TAA SAA TAA
US equity (partially hedged to
GBP)11.9 11.3 17.8 17.2 31.9 31.2 44.3 43.3 49.1 48.8
Europe equity
(partially hedged to GBP)3.4 3.4 5.0 5.2 9.0 9.0 12.5 12.5 13.9 13.8
UK equity 1.3 1.4 1.9 1.9 3.4 3.5 4.7 4.6 5.2 5.3
Japan equity
(partially hedged to GBP)1.8 2.8 2.7 3.8 4.9 5.9 6.8 7.8 7.5 8.4
Pacific ex Japan equity 0.9 1.0 1.4 1.5 2.5 2.5 3.5 3.5 3.9 3.7
Emerging markets equity 2.8 4.6 4.1 6.0 7.4 9.1 10.3 11.8 11.4 12.8
Total equity 22.0 24.4 33.0 35.7 59.0 61.2 82.0 83.5 91.0 92.7
Global government bond
(hedged to GBP)47.5 45.9 20.0 18.1 10.0 9.2 0.0 1.0 0.0 0.0
Global corporate bond
(hedged to GBP)26.0 24.1 41.0 39.0 25.0 23.3 12.0 9.1 3.0 1.1
Total fixed income 73.5 70.0 61.0 57.1 35.0 32.5 12.0 10.1 3.0 1.1
Global listed property 3.5 3.6 5.0 5.2 5.0 5.2 5.0 5.1 5.0 4.9
Total alternatives 3.5 3.6 5.0 5.2 5.0 5.2 5.0 5.1 5.0 4.9
Cash 1.0 2.0 1.0 1.9 1.0 1.2 1.0 1.2 1.0 1.3
Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
Source: HSBC Global Asset Management, 29 March 2019. For illustrative purposes only. Allocations may change without prior notice. Allocations may not add up to
100 due to rounding. Fixed income exposure is entirely hedged to GBP in all GS portfolios. Approach to hedging non-GBP currency exposure from developed
market equities differs between the portfolios, depending on the risk profile.
4
Portfolio objective
Aims to provide capital growth through cautious
investment in a broad range of asset classes
across global markets, with a bias towards fixed
interest securities.
Target volatility range 0% - 5%
Ratings
OCF 0.16%2
Global Strategy Cautious Portfolio
1. DT rating as at 29 March 2019.
2. OCFs as at the end of March 2019, sourced from HSBC Global Asset Management of ‘C acc share class’ of the relevant fund.
Source: HSBC Global Asset Management, 29 March 2018. Note: for illustrative purposes only. Characteristics and weightings are for illustrative purposes only, are
subject to change over time taking into account any changes in markets. Please note that some numbers have been rounded up or down.
1
Tactical positioning
11.1%
3.4%
1.3%2.8%
0.9%
4.5%
46.5%
24.0%
3.5%2.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
50.0%
US Equity EuropeEquity
UK Equity Japan Equity Pacific exJapan Equity
EmergingMarketsEquity
GlobalGovernment
Bond
CorporateBond
Property Cash
5
Traditional Passive (28.0%)
Actively Managed (25.6%)
Derivatives (2.6%)
Direct Holding (41.8%)
Cash (2.0%)
Global Strategy Cautious Portfolio
Source: HSBC Global Asset Management, 29 March 2019. Note: for illustrative purposes only. Characteristics and weightings are for illustrative purposes only, are
subject to change over time taking into account any changes in markets. Please note that some numbers have been rounded up or down.
Strategy %
US equity
HSBC American Index Traditional Passive 11.13
Europe equity
HSBC European Index Traditional Passive 3.35
UK equity
HSBC FTSE 100 Index Traditional Passive 1.27
Japan equity
HSBC Japan Index Traditional Passive 2.81
Pacific ex Japan equity
iShares Pacific Index Traditional Passive 0.94
Emerging markets equity
iShares Emerging Markets Index Traditional Passive 4.50
Global government bond
Multiple direct holdings Direct Holding 41.98
Lyxor US Tips (DR) ETD USD Actively Managed 1.50
US Treasury Future Derivatives 3.00
Corporate bond
HSBC Global Corporate Bond Index Actively Managed 24.00
Property
HSBC FTSE EPRA/NAREIT Developed ETF Traditional Passive 3.50
Cash
Cash Cash 1.00
HSBC Sterling Liquidity Cash 1.02
Tactical positioning
6
Portfolio objective
Aims to provide capital growth through diversified
investment across global markets with a bias
towards fixed interest securities
Target volatility range 5% - 8%
Ratings
OCF 0.18%1
Global Strategy Conservative Portfolio
1. OCFs as at the end of March 2019, sourced from HSBC Global Asset Management of ‘C acc share class’ of the relevant fund.
Source: HSBC Global Asset Management, 29 March 2019. Note: for illustrative purposes only. Characteristics and weightings are for illustrative purposes only, are
subject to change over time taking into account any changes in markets. Please note that some numbers have been rounded up or down.
2. DT rating as at 29 March 2019.
17.1%
5.0%
1.9%
3.7%
1.4%
5.9%
19.0%
39.0%
5.0%
2.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
US Equity EuropeEquity
UK Equity Japan Equity Pacific exJapan Equity
EmergingMarketsEquity
GlobalGovernment
Bond
CorporateBond
Property Cash
2
Tactical positioning
7
Global Strategy Conservative Portfolio
Source: HSBC Global Asset Management, 29 March 2019. Note: for illustrative purposes only. Characteristics and weightings are for illustrative purposes only, are
subject to change over time taking into account any changes in markets. Please note that some numbers have been rounded up or down.
Traditional Passive (40.9%)
Actively Managed (40.6%)
Derivatives (3.0%)
Direct Holding (13.6%)
Cash (1.9%)
Tactical positioning
Strategy %
US equity
HSBC American Index Traditional Passive 17.10
Europe equity
HSBC European Index Traditional Passive 5.00
UK equity
HSBC FTSE 100 Index Traditional Passive 1.90
Japan equity
HSBC Japan Index Traditional Passive 3.70
Pacific ex Japan equity
iShares Pacific Index Traditional Passive 1.40
Emerging markets equity
iShares Emerging Markets Index Traditional Passive 5.90
Global government bond
Multiple direct holdings Direct Holding 14.50
Lyxor US Tips (DR) ETD USD Actively Managed 1.50
Corporate bond
HSBC Global Corporate Bond Index Actively Managed 32.50
HSBC Sterling Corporate Bond Actively Managed 6.50
Property
iShares Developed Real Estate Index Traditional Passive 5.00
Cash
Cash Cash 1.00
HSBC Sterling Liquidity Cash 1.00
8
Portfolio objective
Aims to provide capital growth through
investment in a broad range of asset classes
across global markets.
Target volatility range 8% - 11%
Ratings
OCF 0.19%2
Global Strategy Balanced Portfolio
1. DT rating as at 29 March 2019.
2. OCFs as at March 2019, sourced from HSBC Global Asset Management of ‘C acc share class’ of the relevant fund.
Source: HSBC Global Asset Management, 29 March 2019. Note: for illustrative purposes only. Characteristics and weightings are for illustrative purposes only, are
subject to change over time taking into account any changes in markets. Please note that some numbers have been rounded up or down.
31.1%
9.0%
3.4%
5.9%
2.5%
9.1%10.0%
23.0%
5.0%
1.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
US Equity EuropeEquity
UK Equity Japan Equity Pacific exJapan Equity
EmergingMarketsEquity
GlobalGovernment
Bond
CorporateBond
Property Cash
1
Tactical positioning
9
Global Strategy Balanced Portfolio
Source: HSBC Global Asset Management, 29 March 2019. Note: for illustrative purposes only. Characteristics and weightings are for illustrative purposes only, are
subject to change over time taking into account any changes in markets. Please note that some numbers have been rounded up or down.
Strategy %
US equity
HSBC American Index Traditional Passive 31.10
Europe equity
HSBC European Index Traditional Passive 9.00
UK equity
HSBC FTSE 100 Index Traditional Passive 3.40
Japan equity
HSBC Japan Index Traditional Passive 5.90
Pacific ex Japan equity
iShares Pacific Index Traditional Passive 2.50
Emerging markets equity
iShares Emerging Markets Index Traditional Passive 9.10
Global government bond
Multiple direct holdings Direct Holding 5.50
Lyxor US Tips (DR) ETD USD Actively Managed 1.50
US Treasury Future Derivatives 3.00
Corporate bond
HSBC Corporate Bond Actively Managed 23.00
Property
HSBC FTSE EPRA/NAREIT Developed ETF Traditional Passive 5.00
Cash
Cash Cash 1.00
Traditional Passive (66.4%)
Actively Managed (24.9%)
Derivatives (3.0%)
Direct Holding (4.6%)
Cash (1.4%)
Tactical positioning
10
Portfolio objective
Aims to provide capital growth through
investment in a broad range of asset classes
across global markets, with a bias towards
equities.
Target volatility range 11% - 14%
Ratings
OCF 0.20%2
Global Strategy Dynamic Portfolio
43.5%
12.5%
4.7%
7.8%
3.5%
12.0%
1.0%
9.0%
5.0%
1.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
50.0%
US Equity EuropeEquity
UK Equity Japan Equity Pacific exJapan Equity
EmergingMarketsEquity
GlobalGovernment
Bond
CorporateBond
Property Cash
1
1. DT rating as at 29 March 2019.
2. OCFs as at March 2019, sourced from HSBC Global Asset Management of ‘C acc share class’ of the relevant fund.
Source: HSBC Global Asset Management, 29 March 2019. Note: for illustrative purposes only. Characteristics and weightings are for illustrative purposes only, are
subject to change over time taking into account any changes in markets. Please note that some numbers have been rounded up or down.
Tactical positioning
11
Traditional Passive (88.6%)
Actively Managed (9.1%)
Derivatives (1.0%)
Cash (1.2%)
Global Strategy Dynamic Portfolio
Strategy %
US equity
HSBC American Index Traditional Passive 33.30
iShares Core S&P 500 Traditional Passive 10.30
Europe equity
HSBC European Index Traditional Passive 12.50
UK equity
HSBC FTSE 100 Index Traditional Passive 4.70
Japan equity
HSBC Japan Index Traditional Passive 7.80
Pacific ex Japan equity
iShares Pacific Index Traditional Passive 3.50
Emerging markets equity
iShares Emerging Markets Index Traditional Passive 12.00
Global government bond
US Treasury Future Derivative 1.00
Corporate bond
HSBC Global Corporate Bond Index Actively Managed 9.00
Property
HSBC FTSE EPRA/NAREIT Developed ETF Traditional Passive 5.00
Cash
Cash Cash 1.00
Source: HSBC Global Asset Management, 29 March 2019. Note: for illustrative purposes only. Characteristics and weightings are for illustrative purposes only, are
subject to change over time taking into account any changes in markets. Please note that some numbers have been rounded up or down.
Tactical positioning
12
Portfolio objective
Aims to provide capital growth through diversified
investment across global markets with a bias
towards equities.
Target volatility range 14%+
Ratings
OCF 0.21%1
Global Strategy Adventurous Portfolio
48.6%
13.9%
5.2%
8.5%
3.9%
12.0%
0.0%1.0%
5.0%
1.0%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
US Equity EuropeEquity
UK Equity Japan Equity Pacific exJapan Equity
EmergingMarketsEquity
GlobalGovernment
Bond
CorporateBond
Property Cash
2
1. DT rating as at 29 March 2019.
2. OCFs as at March 2019, sourced from HSBC Global Asset Management of ‘C acc share class’ of the relevant fund.
Source: HSBC Global Asset Management, 29 March 2019. Note: for illustrative purposes only. Characteristics and weightings are for illustrative purposes only, are
subject to change over time taking into account any changes in markets. Please note that some numbers have been rounded up or down.
Tactical positioning
13
Traditional Passive (97.6%)
Actively Managed (1.1%)
Cash (1.3%)
Global Strategy Adventurous Portfolio
Strategy %
US equity
HSBC American Index Traditional Passive 32.50
iShares Core S&P 500 Traditional Passive 16.10
Europe equity
HSBC European Index Traditional Passive 13.90
UK equity
HSBC FTSE 100 Index Traditional Passive 5.20
Japan equity
HSBC Japan Index Traditional Passive 8.50
Pacific ex Japan equity
iShares Pacific Index Traditional Passive 3.90
Emerging markets equity
iShares Emerging Markets Index Traditional Passive 12.90
Corporate bond
HSBC Global Corporate Bond Index Actively Managed 1.00
Property
iShares Developed Real Estate Index Fund Traditional Passive 5.00
Cash
Cash Cash 1.00
Source: HSBC Global Asset Management, 29 March 2019. Note: for illustrative purposes only. Characteristics and weightings are for illustrative purposes only, are
subject to change over time taking into account any changes in markets. Please note that some numbers have been rounded up or down.
Tactical positioning
14
Notes
15
Notes
16
For professional clients only and should not be distributed to or relied upon by Retail clients.
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.
The HSBC Global Strategy Portfolios area sub-fund of HSBC OpenFunds, an Open Ended Investment Company that is authorised in the UK
by the Financial Conduct Authority. The Authorised Corporate Director and Investment Manager is HSBC Global Asset Management (UK)
Limited. All applications are made on the basis of the HSBC OpenFunds prospectus, Key Investor Information Document (KIID),
Supplementary Information Document (SID) and most recent annual and semi annual report, 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 material contained in this presentation is for information only and does not constitute investment advice or a recommendation to any
recipient of this material to buy or sell investments. HSBC Global Asset Management (UK) Limited has based this presentation on information
obtained from sources it believes to be reliable but which it has not independently verified. HSBC Global Asset Management (UK) Limited and
HSBC Group accept no responsibility as to its accuracy or completeness. This presentation is intended for discussion only and shall not be
capable of creating any contractual or other legal obligations on the part of HSBC Global Asset Management (UK) Limited or any other HSBC
Group company. Care has been taken to ensure the accuracy of this presentation but HSBC Global Asset Management (UK) Limited accepts
no responsibility for any errors or omissions contained therein. The views expressed here were held at the time of preparation and are subject
to change.
Any forecast, projection or target where provided is indicative only and is not guaranteed in any way. HSBC Global Asset Management (UK)
Limited accepts no liability for any failure to meet such forecast, projection or target. Past performance should not be seen as an indication of
future returns. The value of investments and any income from them can go down as well as up and investors may not get back the amount
originally invested.
Where overseas investments are held the rate of currency exchange may cause the value of such investments to go down as well as up.
Investments in emerging markets are by their nature higher risk and potentially more volatile than those inherent in established markets. Stock
market investments should be viewed as a medium to long term investment and should be held for at least five years.
Where charges are taken from capital, although this will enhance the income distributed, it may constrain the capital growth of your
investment. If charges are taken from income, and there is insufficient income to meet such charges, any deficit will be taken from the capital.
This could result in an erosion of the capital value of the investment. The level of yields are not guaranteed and may rise or fall in the future.
This document is issued in the UK by HSBC Global Asset Management (UK) Limited which is authorised and regulated by the Financial
Conduct Authority. Copyright HSBC Global Asset Management (UK) Limited 2019. All Rights Reserved. ED0982. EXP310719
Important information
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.
The key types of risk associated with the HSBC Global Strategy
Portfolios asset allocations are as follows:
1. Equity risks
Market fluctuations can affect the performance of an investment
fund both upwards and downwards. You may not get back the full
amount invested.
2. Emerging markets 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.
3. Exchange rate risk
Investing in assets denominated in a currency other than that of
your own currency perspective exposes the value of the investment
to exchange rate fluctuations.
4. Fixed income risk
As interest rates rise debt securities will fall in value. 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.
5. Real estate risk
Cost of acquisition and disposal, taxation, planning, legal,
compliance and other factors can materially impact real estate
valuation.
Please refer to the Key Investor Information Document (KIID) for the
full list of risks
1. Copyright © 2019 - Morningstar UK Limited. All Rights Reserved. Ratings should not be taken as a recommendation.
Please note that the HSBC Global Strategy Balanced Portfolio – Retail X Acc – and HSBC Global Strategy Dynamic Portfolio – Retail X
Acc – are both rated 5 Stars as at 29 March 2019.
2. Please note that FE invest approval logo applied to Cautious, Balanced and Dynamic portfolios only.
3. Please note that the Dynamic Planner Premium logo relates to the Balanced and Dynamic portfolios only.