13 June 2019

HSBC AMG launches global corporate fixed term bond fund

HSBC Global Asset Management (“HSBC”) announced the launch of HSBC Global Investment Funds – Global Corporate Fixed Term Bond 2022 (“the Fund”) to retail investors in Singapore. The Fund aims to provide clients with a potential monthly income1 through its distribution share class over the course of its 2.5 years tenor, achieved through broadly diversified investments in developed and emerging markets. It also aims to return the Fund’s net asset upon maturity.

The Fund aims to generate monthly dividend (certain classes target a relatively stable dividend income)1 and return net assets upon maturity2. It is broadly diversified across investment grade and high yield bonds in developed markets and emerging markets, with a maximum of 30% of its assets to be invested in non-investment grade bonds to achieve an average rating of BBB-. A robust default analysis process is in place to monitor the underlying securities and ensure credit risk is managed. Besides North America and Europe, the Fund has a considerable weighting in Asia in terms of asset allocation.

A fixed term bond fund combines the benefits of single bond investments and bond funds. Both fixed term bond funds and single bonds have pre-defined maturity dates, and therefore are potentially less subject to daily price fluctuations and interest rate risk. Just like traditional bond funds, the Fund is professionally managed by an investment team and has a lower minimum subscription threshold than individual bonds.

Subscription for the Fund starts on 12 June for Singapore retail investors. The initial public offering will end on 25 June and the Fund will begin trading on the same day. With a base currency in USD, the Fund also offers share classes in SGD, RMB and AUD. The investement threshold is USD1,000, SGD1,000, RMB5,000 and AUD1,000. For investors who wish to redeem the fund prior to the maturity date, swing pricing will apply at up to 2% of the redemption amount to protect existing investors against transaction costs.

Note to editors:

  1. Dividend is not guaranteed and may be paid out of capital which will result in capital erosion and reduction in net asset value.
  2. Final portfolio value depends on the number of defaults and reinvestment rates over the life of the Fund. There is no guarantee of the income and repayment of principal of the Fund. Investors may not recoup the original amount invested in the Fund at the Term Date.

Important information:

  • It is intended that the Fund’s term will end in January 2022 (the "Term Date"), the date when the Fund will be liquidated and Shares of the Fund will be compulsorily redeemed.
  • The Fund invests mainly in corporate bonds with a final maturity date on or before the Term Date.
  • The Fund is subject to the risks of investing in emerging markets and concentration risk.
  • Non-investment grade bonds and unrated bonds may subject to additional risks and volatility.
  • The time horizon of the Fund is limited (i.e. up to the Term Date). Investors should have regard to the fixed time horizon of the Fund in deciding whether investment in the Fund is suitable for them. Neither the income nor the capital of the Fund is guaranteed. Investors may not recoup the original amount invested in the Fund at the Term Date.
  • The Fund’s investments may mature prior to the Term Date. The closer the Fund is to the Term Date then the greater the investment in replacement shorter-dated securities (with progressively shorter maturities) and cash. Shorter-dated securities or cash may not offer as high a return as the securities they replace.
  • Because the Fund’s base currency, investments and classes may be denominated in different currencies, investors may be affected unfavourably by exchange controls and exchange rate fluctuations. There is no guarantee that the currency hedging strategy applied to the relevant classes will achieve its desired result.
  • The Fund may pay dividends out of capital or gross of expenses. Dividend is not guaranteed and may result in capital erosion and reduction in net asset value.
  • The Fund may invest in financial derivative instruments for investment purpose which may lead to higher volatility to its net asset value.
  • The Fund’s investments may involve substantial credit, currency, volatility, liquidity, interest rate, tax and political risks. Investors may suffer substantial loss of their investments in the Fund.
  • Unit trusts are NOT equivalent to time deposits. Investors should not invest in the Fund solely based on the information provided in this document and should read the offering document of the Fund for details.