HSBC Global Strategy PortfoliosA world of investments made affordable

For Professional Clients Only

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A world of investments made affordable

HSBC Global Asset Management

HSBC Global Asset Management is the HSBC group’s investment management arm. We have a strong background in managing multi-asset funds over the past 20 years. We have over USD406.1bn (excluding Brazil1) of client assets under our management, with USD72.5bn in multi-asset products globally2.

Designed with the client in mind

In today’s low interest environment, investors are looking for alternative sources of attractive risk-adjusted returns. Furthermore, the UK government’s pension reforms have led to pension holders increasingly considering strategies other than annuities to save for retirement needs. However, the volatility associated with certain asset classes, such as equity only investments, is not for everyone. Investors often have a more cautious stance when it comes to investment risk and expect their portfolio to be managed in line with their individual risk attitude. And last but not least, investors look for the price of an investment product to be extremely competitive, as costs eat into their net returns. Our HSBC Global Strategy Portfolio range aims to meet all these key client requirements.

Our multi-asset solutions follow a globally consistent investment approach based on active asset allocation and cost-efficient fulfilment. The capabilities that we have in this area are supported by a dedicated global team of over 60 investment professionals.

Source: 1. HSBC Global Asset Management as at 30 June 2016. At 30 June 2016, our operations in Brazil were classified as held for sale. The sale of our operations in Brazil completed on 1 July 2016.Source: 2. HSBC Global Asset Management as at 30 June 2016. Assets from HSBC Brazil are not included.

Past performance is not a guide to future performance.

* Copyright © 2016 - Morningstar UK Limited. All Rights Reserved. Ratings should not be taken as a recommendation.

Price

The Ongoing Charges Figure (OCF) on the HSBC Global

Strategy Portfolios ranges between 0.17% and 0.19%.

In our opinion, this pricing makes the HSBC Global Strategy

Portfolio range one of the most affordable multi-asset

investments in the UK.

To ensure that overall costs to the end client remain as

competitive as they are today, we have set up a process to

review the various cost components on a regular basis, so

we can take action when necessary.

Accessibility and risk profiling

The HSBC Global Strategy Portfolio range is available

through all major platforms.

The three portfolios have been reviewed independently and

risk profiled by Distribution Technology. The HSBC Global

Strategy Cautious portfolio is currently risk rated 3, the

HSBC Global Strategy Balanced portfolio is 5 and the HSBC

Global Strategy Dynamic portfolio is 7.

The Global Strategy Portfolio range can also be found on

Defaqto where they are currently rated 5 diamonds.

HSBC Global Strategy Portfolios

Strategic Asset Allocation

Tactical Asset Allocation

Diversification Global

Review of portfolio positioning Daily

Cost OCF = 0.17% to 0.19%

*

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Why asset allocation is important

Get your asset allocation wrong and any returns from the

individual indices being tracked can be completely wiped out.

The diagram below shows the variation of asset class returns

from year to year.

Two simple facts become evident:

1. Asset class performance varies from year to year.

2. Diverse asset classes offer returns that are not

perfectly correlated.

This underlines our view that dynamic asset allocation with

regular, disciplined reviews and adjustments is critical to a

successful investment strategy.

Our approach to asset allocation emphasises targeting a

realistic long-term real return after inflation, which rewards

investors for the risk being taken.

‘06

25.03

16.30

11.38

9.99

5.83

4.84

3.29

2.73

1.19

0.69

‘07

37.43

16.57

7.72

6.79

6.14

6.08

5.27

3.79

2.20

-8.17

‘08

28.93

12.81

11.52

6.10

-3.15

-9.94

-17.39

-27.37

-28.88

-35.18

‘09

59.48

59.39

27.00

24.79

16.45

15.81

10.10

1.47

1.33

-1.16

‘10

24.71

22.94

19.81

15.87

15.00

12.34

7.46

7.20

3.62

0.69

‘11

15.57

8.19

5.96

5.13

2.93

0.84

-1.23

-4.31

-5.32

-17.57

‘13

25.00

7.31

2.35

0.51

0.39

0.19

-3.94

-4.08

-5.78

-10.76

‘14

23.22

13.86

12.07

8.70

8.02

7.48

4.29

2.71

0.54

0.24

‘12

22.84

18.75

13.42

11.49

11.42

10.93

4.74

2.70

0.89

18.14

Bestperformingasset classin year

Worstperformingasset classin year

Year

‘15

5.81

5.45

1.70

0.74

0.57

0.57

0.12

-2.11

-9.65

-10.03

Global government bonds

Emerging market equities

Global investment grade credit

Global high yield credit

Property

Developed market equities

Hard currency EMD

Local currency EMD

Cash

UK government bonds

Key:

Past performance is not an indication of future returns.

Source: 3 month GBP LIBOR (Cash), BofA Merrill Lynch Global Corporate Index Hedged GBP (Global Investment Grade Credit), MSCI World GBP (Developed Market Equities), MSCI EM GBP (Emerging Market Equities), Citigroup WGBI All Mat Hedged GBP (Global Government Bonds), FTSE Government UK Gilts All Stocks (UK Government Bonds), FTSE EPRA NAREIT Dev GBP (Property), BofA Merrill Lynch Global High Yield Index Hedged GBP (Global High Yield Credit), BofA Merrill Lynch US Dollar Emerging Markets Sovereign Plus Index Hedged GBP (Hard Currency EMD), JPM GBI-EM Global Diversified Composite GBP (Local Currency EMD). As at 31/12/15.

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Since launch in 2011, the range has been able to build

a strong track record in an array of different market

conditions. For example, the medium risk ‘Balanced’

portfolio, has provided strong annualised net returns of

9.57% since inception (as at September 30, 2016).

Performance on a risk-adjusted basis is equally strong,

as the following chart shows:

Track record

Well-diversified portfolios for three distinct risk profiles

We want to make investment decisions simpler for clients.

So our HSBC Global Strategy Portfolio range gives investors

the ability to choose a single fund that gives them access to

the world’s financial markets.

We undertook customer research to establish the various

investor segments and their attitudes to investment risk,

as well as their expectations from a multi-asset investment

solution. These insights have been use to create these risk

focused multi-asset solutions.

Depending on your clients’ risk objectives, you can choose

from one of the three portfolios:

Portfolios

Optimised for a long-term annualised volatility

Distribution Technology (DT) Risk Ratings2

HSBC Global Strategy – Cautious Portfolio 4.5% 3

HSBC Global Strategy – Balanced Portfolio 9.5% 5

HSBC Global Strategy – Dynamic Portfolio 12.5% 7

Source: 2. Distribution Technology as at October 2016.

Source: HSBC Global Asset Management, DataStream, Bloomberg as at 30 September 2016.

Global Strategy returns are calculated from inception on 17 October 2011 to 30 September 2016, gross of AMC and net of underlying manager expenses, then annualised. MSCI AC World, FTSE All Share and FTSE British Govt All Stocks indices are in GBP, total return, from 17 October 2011 to 30 September 2016. Volatility is based on monthly total returns, in GBP, annualised, from October 17 2011 to 30 September 2016.

The predecessor of the HSBC Global Strategy Portfolio range (‘HSBC World Index’) launched in 2011 was using the same portfolio construction process. Performance information above refers to the past and should not be seen as a guide to the future.

Global StrategyCautious

Global StrategyBalanced

Global StrategyDynamic

FTSEAll Share

0

5

10

20

15

2 4 6 8 10 12

An

nu

alis

ed p

erfo

rman

ce (%

)

Monthly annualised volatility (%)

MSCI AC World (GBP)

FTSE Brit Govt

*

* Copyright © 2016 - Morningstar UK Limited. All Rights Reserved. Ratings should not be taken as a recommendation.

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How we manage the portfolios – our process

We have a rigorous process to ensure that our portfolio

objectives are met. For example, all asset classes held

within the HSBC Global Strategy range have to be

sufficiently liquid and easily accessible in order to add

to the overall diversification benefits.

A sophisticated process that uses advanced quantitative

screening processes and analysis, coupled with a qualitative

overlay, enables us to come up with the optimum mix of

investments for each of the three portfolios.

To ensure we can deliver all of this to the end investor at

an extremely affordable price, the HSBC Global Strategy

Portfolio range primarily uses passive investment products,

namely index tracking funds and ETFs, to implement

portfolio asset allocation.

Source: HSBC Global Asset Management, September 2016.

1. Strategic Asset Allocation (SAA)

` Blending of asset classes, regions

and currencies to identify the optimal

long-term portfolio positioning for the

specificrisk profile

` Reviewed at least annually

2. Tactical Asset Allocation (SAA)

` Reflecting shorter term views

and asset class preferences in

the portfolios

` Rationale for TAA positioning is

reviewed at least monthly

3. Portfolio Implementation

` Identification of the most

appropriate fulfilment approach for

each asset class

` Strong focus on cost efficiency

` Portfolio positioning monitored daily

1. Strategic

Asset Allocation

2. Tactical

Asset Allocation

3. Portfolio

Implementation

Investment process

The HSBC Global Strategy Portfolio range employs a

dynamic asset allocation strategy. The range consists of

three portfolios, constructed to match your clients’ individual

risk budgets. Each portfolio is globally invested, across

developed and emerging markets, and holds exposure to

global equities, global bonds and global property securities.

The portfolios’ asset allocations are optimised for long-

term risk budgets. We understand the risks of a ‘set and

forget’ approach to asset allocation and therefore re-run our

portfolio construction process on a regular basis as well as

monitor our holdings daily. These regular reviews ensure

that the portfolios do not drift away from their long-term risk

profiles - Cautious, Balanced or Dynamic. In addition, our

asset allocation construction is based not only on historical

data but also on our projections for market returns. This

forward-looking approach to portfolio construction is crucial

to make the HSBC Global Strategy Portfolio range’s asset

allocation robust for times to come.

Shorter-term preferences for asset classes, regions and

currencies are expressed within the HSBC Global Strategy

range’s tactical asset allocation. Tactical positioning can be

driven by asset class valuations, macroeconomic data flow,

market sentiment, and other factors. TAA positions and their

rationale are reviewed at least monthly.

We believe that passive vehicles are often the best way

to capture the desired asset allocation well and cost

efficiently. In the HSBC Global Strategy Portfolio range, we

have a preference for HSBC managed passive investment

vehicles as they are typically the most cost efficient way to

implement portfolio exposure (we can typically access them

at zero management fees). This ensures that overall costs to

the end investor, the OCFs, are kept as low as possible.

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Global exposure

HSBC Global Strategy Portfolio range gives you and

your clients access to a global, cost efficient, highly

diversified, risk-focused investment proposition. HSBC

Global Strategy Portfolios access the markets primarily through

passive investment vehicles, such as index trackers and

ETFs. When it is cost-efficient to do so, the portfolios invest in

financial instruments directly, such as government bonds.

With HSBC’s Global Strategy Portfolios your clients can

benefit from the expertise of our well-resourced and highly

qualified investment teams managing the portfolios and

their asset allocation.

Please note that the value of investments and any income

from them can go down as well as up and clients may not

get back the amount originally invested. Where overseas

investments are held the rate of currency exchange may

also cause the value of such investments to fluctuate. Stock

market investments should be viewed as a medium to long

term investment and should be held for at least five years.

Asset Class (%)

Global Strategy Cautious Global Strategy Balanced Global Strategy Dynamic

SAASeptember

2016SAA

September 2016

SAASeptember

2016

US Equity 11.3 8.4 29.7 26.8 42.1 39.2

Europe Equity 3.2 4.8 8.5 10.1 12.0 13.7

UK Equity 1.4 1.2 3.6 3.5 5.2 5.0

Japan Equity 1.6 3.4 4.3 6.1 6.1 7.9

Pacific ex Japan Equity 0.9 0.8 2.2 2.1 3.2 3.1

Emerging Markets Equity 2.1 2.9 5.6 6.3 7.9 8.7

Total Equity 20.5 21.5 54.0 55.0 76.5 77.5

Global Government Bond 42.5 36.5 10.0 6.0 0.0 0.0

Corporate Bond 32.0 32.0 30.0 30.0 17.5 16.5

Total Fixed Income 74.5 68.5 40.0 36.0 17.5 16.5

Property 4.0 4.0 5.0 5.0 5.0 5.0

Total Alternatives 4.0 4.0 5.0 5.0 5.0 5.0

Cash 1.0 6.0 1.0 4.0 1.0 1.0

Total 100.0 100.0 100.0 100.0 100.0 100.0

Source: HSBC Global Asset Management, 30 September 2016. 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.

HSBC Global Strategy Portfolios Team

Jane DaviesSenior Portfolio Manager (UK) HSBC Global Asset Management

Jane is a Senior Portfolio Manager and has been managing the World Selection Portfolios and Global Strategy Portfolio ranges since launch. She has been extensively involved in the development of the investment approach used to manage HSBC’s Wealth products. Jane has 18 years of portfolio management experience with the HSBC Group, focusing on multi-asset portfolio management and asset allocation. Her previous roles include Head of Global Investment Solutions, with responsibility for developing and structuring investment solutions for clients globally, including strategic asset allocation

modelling and portfolio construction. Prior to that, Jane was Head of Multimanager for the UK and Middle East. She joined the Multimanager team at its inception and played a key role in developing both the manager selection process and the portfolio construction process. Prior to that, Jane worked within the Tactical Investment Unit of HSBC Global Asset Management focusing on tactical asset allocation and derivatives, after being a tutor in Statistical Research Methods with the Institute of Public Administration and Management MBA programme. She joined the asset management industry in 1998. Jane is a qualified Chartered Financial Analyst (CFA), holds the Investment Management Certificate (IMC), is a Member of the Society of Technical Analysts (MSTA), and holds a First Class BSc (Hons.) degree in Psychology and Philosophy (University of Leeds).

Jim DunsfordHead of World Selection Portfolio HSBC Global Asset Management

Jim Dunsford was appointed Head of HSBC World Selection Portfolio Management in January 2016. He has been working in the industry since 1972 and joined the HSBC Group in 1978 as an institutional fixed income investment manager. Jim has held a variety of positions at HSBC, including Global Head of Fixed Income, Head of Economics and Strategy, and CIO of HSBC Global Asset Management (UK). In 2007 Jim helped to develop our Global Macro strategy which he has continued to manage in addition to participating in the asset allocation process for UK and global multi-asset funds. He holds a Master’s

degree from Cambridge University and carried out postgraduate research in Management Development at Birkbeck College, London University. He also holds a Certified Diploma in Accounting and Finance.

Meike BliebenichtSenior Product Specialist, Multi-Asset HSBC Global Asset Management

Meike is a Senior Product Specialist for the global Multi-Asset investment capabilities at HSBC Global Asset Management in London. She works closely with the portfolio management team to act as the external spokesperson for various global multi-asset ranges, representing the views and investment strategies of the team. Meike’s responsibilities also include defining and championing the multi-asset product offering and business strategy, as well as all aspects of wholesale and institutional client relations. Before joining HSBC Global Asset Management in 2010, Meike spent 7 years with JP Morgan

Asset Management in London and Frankfurt, most recently as a Senior Product Specialist for multi-asset and equity products, where she specialised in creating sophisticated UCITS investment strategies. Prior to that, Meike worked for Berenberg Bank in Hamburg in portfolio management and relationship management roles. She has 16 years industry experience. Meike holds a Diplom-Bankbetriebswirt degree from the Frankfurt School of Finance & Management.

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This document is intended for Professional Clients only and should not be distributed to or relied upon by Retail Clients. The views expressed above were held at the time of preparation and are subject to change without notice. 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. The HSBC Global Strategy Portfolio are sub-funds 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) 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. Any performance information shown refers to the past and should not be seen as an indication of future returns. To help improve our service and in the interests of security we may record and/or monitor your communication with us. The HSBC Global Strategy Portfolios are investment products and their value and any income from them can go down as well as up. HSBC Global Asset Management (UK) Limited provides information to Institutions, Professional Advisers and their clients on the investment products and services of the HSBC Group. This document is approved for issue in the UK by HSBC Global Asset Management (UK) Limited who are authorised and regulated by the Financial Conduct Authority. Copyright © HSBC Global Asset Management (UK) Limited 2016. All rights reserved. 16WS0122/ED/1016 FP16-1657 EXP 14/12/2016

ContactFor more information, please contact us:

Telephone: 0800 358 3011

Website: www.assetmanagement.hsbc.com/uk/advisers

Reasons to invest in the HSBC Global Strategy Portfolio range

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

also is 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 portfolio’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 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 fee. This enables us to

offer the HSBC Global Strategy Portfolios at OCFs ranging

from only 0.17% to 0.19%.

3. Global diversification. Through a single investment

solution, the portfolio provides access to a well diversified

portfolio, invested across global equities, global bonds

and global real estate securities.

4. Ongoing reviews of portfolio positioning. Our portfolio

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 the three core customer types:

cautious, balanced and dynamic investors. Customer

needs were reviewed in cooperation with an external

consultant in 2015 and the HSBC Global Strategy Portfolios

were constructed to deliver to these three risk profiles.

Past performance is not a guide to future performance.