HSBC Global Investment Funds - Global Asset-Backed Bond

Transcription

1 HSBC Global Investment Funds - Global Asset-Backed Bond S Share Class AM2 AM2 31/08/2018 Fund Objective and Strategy Investment Objective The Fund invests for long-term total return (meaning capital growth and income) by investing in asset-backed securities (ABS) and mortgage-backed securities (MBS). These are securities backed by financial assets. The Fund can also invest in fixed income instruments denominated in a range of currencies. Investment Strategy These include corporate bonds, government securities and cash, among others. Issuers of these fixed income instruments may be located in any country. The underlying assets of the ABS and MBS include mortgages (residential and commercial), car loans, corporate loans, bonds, credit cards, student loans and other receivables. The Fund only invests in securities that are rated, at the time of purchase, at least BBB- or equivalent by an independent rating agency, such as Moody's or Standard & Poor's. See the Prospectus for a description of derivative usage. Since Inception Performance (%) Fund Share Class Details UCITS V Compliant Valuation Time Min. Initial Investment Yes Distributing Monthly Daily 17:00 Luxembourg 1,000 Performance (%) YTD 1M 3M 1Y 3Y¹ 5Y¹ Since Max. Initial Charge 3.00% Inception Base Currency AM Domicile Luxembourg AM2 (Net) ISIN Inception Date LU Calendar Year NAV per Share Performance (%) Fund Size 518,639,817 AM2 Bloomberg Ticker HSGAAM2 LX AM2 (Net) 2 Manager Andrew John Jackson Past performance is not an indicator of future returns. The figures are calculated in the share class base currency, dividend reinvested. 1 Result is annualised when calculation period Source: HSBC Global Asset Management, data as at 31 August 2018 is over one year. Risk Disclosure 2 Net of relevant prevailing sales charge General Risk: The Fund's unit value can go up as well as down, and any capital invested in the Fund may be at risk. Fixed Income Risk: The Fund invests in bonds whose value generally falls when interest rates rise. This risk is typically greater the longer the maturity of a bond investment and the higher its credit quality. The issuers of certain bonds, could become unwilling or unable to make payments on their bonds and default. Bonds that are in default may become hard to sell or worthless. Derivatives Risk: Derivatives may be used by the Fund, and these can behave unexpectedly. Hedging Risk: The pricing and volatility of many derivatives may diverge from strictly reflecting the pricing or volatility of their underlying reference(s), instrument or asset. Investment Leverage Risk: Investment Leverage occurs when the economic exposure is greater than the amount invested, such as when derivatives are used. A Fund that employs leverage may experience greater gains and/or losses due to the amplification effect from a movement in the price of the reference source.. Documentation Statement: Further information on the Fund's potential risks can be found in the Key Investor Information Document and Prospectus. Subscription Mode Distribution Type Distribution Frequency Dealing Frequency Cash Annual Management Fee 0.90%

2 HSBC Global Investment Funds - Global Asset-Backed Bond Share Class AM2 3-Year Risk Measures AM2 5-Year Risk Measures AM2 Volatility - Volatility - Sharpe Ratio - Sharpe Ratio - Tracking Error - Tracking Error - Information Ratio - Information Ratio - Characteristics Fund Characteristics Fund Spread above Libor 0.01 Floating Rate Weight 0.87 Modified Duration 0.9 Years Rating Average 4 AA- Weighted Average Life Years Credit Quality Rating Fund Allocation (%) Sector Allocation (%) Fund AAA AA CLO A CMBS Cash 1.97 RMBS non-conforming Sorted from highest to lowest rating. Cash is not included in RMBS prime 6.40 any rating. Student Loan ABS 2.56 Geographical Allocation (%) Fund Whole Business ABS 1.91 Other 0.93 United States Cards 0.45 UK Autos 0.41 Australia Cash 1.97 Italy 2.00 Sorted from largest to smallest per market values of weight. Netherlands 1.80 Belgium 0.40 Germany 0.30 Japan 0.30 Pan European 0.30 Sorted from largest to smallest per market values of weight. Option Adjusted Spread Duration (OASD) Years 3 OASD, Option Adjusted Spread Duration, excludes interest rate futures, bond futures and excess return from interest rate swaps. 4 Average credit rating uses 'Index rating' which is an average of the vendors: S&P, Fitch, Moody s. The average fund and benchmark rating does not include securities rated NR or NA. 5 The Weighted Average Life (WAL) of the fund is the average number of days to maturity calculated using the final legal maturity of all instruments, including floating rate notes. Thus, where the fund holds no floating rate instruments WAM and WAL will be the same. Source: HSBC Global Asset Management, data as at 31 August 2018

3 HSBC Global Investment Funds - Global Asset-Backed Bond Share Class AM2 Monthly Performance Commentary Market Overview As expected the market slowed considerably in August. Although there was a tail to the Primary pipeline, particularly in the US, the secondary market was noticeably sparse in August. In markets outside of the US, around 4bn of new issues priced, with all of it publicly offered and minimal amounts retained. This is the same volume as a year ago, but then none of the paper was sold to market participants. The US also saw some issuance, with CMBS at slightly less than $9.5bn compared to $10bn in July. US issuance was dominated by Agency CMBS and Single Asset Single Borrower CMBS. CLO issuance also held up as deals reset and the primary pipeline continued. Broader market headwinds from issues such as the Trade wars, Brexit and interest rate announcements caused most markets to soften despite the light supply, with spreads widening in all Securitised Credit Sectors. Spread widening was again larger in UK ABS given fears of a hard Brexit. Notable trades in the market were: an issue from one the largest UK RMBS master trusts all in, 2 UK CMBS, but otherwise dominated by Australian RMBS. Fund Overview At the end of August, there were 166 securities in 137 securitisations and a cash holding which is available to cover currency hedging collateral. In August, the fund bought 13 bonds in 10 deals (of which 1 was an add-on to an existing securitisation): 5 CMBS (4 in the US - 1 in the UK), 5 US CLOs in 3 deals, 2 Australian RMBS and a Container leasing deal. There were no sales and one full repayment. There were partial amortisations on 19 positions in the month: 6 Australian RMBS, 2 UK Buy to let RMBS, 1 Student Loan ABS, 2 US PACE (Green energy) Loan RMBS, 1 UK non-conforming RMBS, 5 CMBS (of which 2 in the US), 1 container leasing deal and a European Auto loan ABS. CLOs remain the largest asset class with 33%, ahead of CMBS on 31% and RMBS on 28%. The major geographic exposure remains the USA at 66%, with the UK on 16%, Australia at 13% and Eurozone is 5% of the portfolio. The portfolio is 13% fixed rate and 87% floating rate at the end of the month, with floating rate income based on 1 month or 3 month, Sterling or Euro LIBOR. Approximately 67% of the instruments are -denominated and pay all income and repayments in US Dollars. The remaining 33% is denominated in Sterling, Euro and Australian Dollars. We hedge the full market value and accrued income back to each month. This hedge effectively covers all principal repayments. The fund remains invested in highly rated securities, with the weighted average rating of AA at month end. Outlook As we head into September, we expect the primary pipeline to grow again, with significant issuance from CLOs. The secondary market should re-commence as well. The potential for rising rates continues to impact markets and we are seeing significant interest in the Securitised Credit market given the floating rate nature of the majority of the market. We continue to expect some withdrawal of stimulus or rate rises in the US, Europe and UK. The probability of an impending global trade war has led to Fixed Income and Equity price corrections. The UK also appears to be entering a period of volatility given the Brexit negotiations. Given this market backdrop we expect prices to be volatile and spread widening is likely if the headlines continue to be negative, with the possibility of a snap back on good news. Rate rises look to be gradual and carefully managed, so we do not believe that there will be near term lack of affordability, but longer term concerns remain. Some pockets of risk are appearing in the wider economy that directly impact certain sectors which we will continue to watch: Corporate leverage CLOs, Retail exposure CMBS, House price bubbles Australian RMBS and residual value risk on car leases Autos. We will look to exit sectors and countries where the risk premium no longer makes sense and focus on the better credit risks going forward to help us manage through volatility from outside of the structured credit market were that to arise.

4 HSBC Global Investment Funds - Global Asset-Backed Bond Share Class AM2 Important Information This document does not constitute an offering document and should not be construed as a recommendation, an offer to sell or the solicitation of an offer to purchase or subscribe to any investment. This document is for information only and is not an advertisement, investment recommendation, research, or advice. Any views and opinions expressed are subject to change without notice. It does not have regard to the specific investment objectives, financial situation, or needs of any specific person. Investors and potential investors should not invest in the Fund solely based on the information provided in this document and should read the prospectus (including the risk warnings) and the product highlights sheets, which are available upon request at HSBC Global Asset Management (Singapore) Limited ( AMSG ) or our authorised distributors, before investing. You should seek advice from a financial adviser. Investment involves risk. Past performance of the managers and the funds, and any forecasts on the economy, stock or bond market, or economic trends that are targeted by the funds, are not indicative of future performance. The value of the units of the funds and income accruing to them, if any, may fall or rise and investor may not get back the original sum invested. Changes in rates of currency exchange may affect significantly the value of the investment. AMSG has based this document on information obtained from sources it reasonably believes to be reliable. However, AMSG does not warrant, guarantee or represent, expressly or by implication, the accuracy, validity or completeness of such information. HSBC Global Asset Management (Singapore) Limited 21 Collyer Quay #06-01 HSBC Building Singapore Telephone: (65) Facsimile: (65) Website: Company Registration No R Should there be any discrepancy, the English version shall prevail

5 HSBC Global Investment Funds - Global Asset-Backed Bond Share Class AM2 Terms of Glossary Convertible bond, is a type of bond that the holder can convert into a specified number of shares of common stock in the issuing company or cash of equal value. Corporate bond, is bond issued by a company in order to raise financing. Coupon, the annual interest rate paid on a bond, expressed as a percentage of the face value. Credit quality, one of the principal criteria for judging the investment quality of a bond or bond mutual fund. Developed markets, countries that are most developed in terms of its economy and capital markets. Duration, a measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. Emerging markets (EM), nations' economies in the process of fast economic growth. Investments in emerging markets are generally considered to be with higher risk. Government bond or Gilt, a loan to a national government in return for regular payments (known as the coupon) and a promise that the original investment (principal) is paid back at a specified date. Gilts are loans to the UK government. High yield bond, is fixed income security with a low credit rating from a recognised credit rating agency. They are considered to be at higher risk of default, but have the potential for higher rewards. Information ratio, is a ratio of portfolio returns above/under the returns of a benchmark to the volatility of those returns. Investment grade bond, is considered investment grade or IG if its credit rating is BBB- or higher by Standard & Poor's or Baa3 or higher by Moody's. Maturity, the period of time for which a financial instrument remains outstanding. Modified duration to worst, the lowest potential duration that will achieve on a bond without the issuer actually defaulting. Option adjusted duration (OAD), is a duration value based on the probability of early redemption call by the bond issuer. Option adjusted spread duration (OASD), estimates the price sensitivity of a bond to a 100 basis-point movement (either widening or narrowing) in its spread relative to Treasuries, taking into account the likelihood of early redemption. Sharpe ratio, a measure for calculating risk-adjusted return, and this ratio has become the industry standard for such calculations. Tracking error, a measure of how closely a portfolio follows the index to which it is benchmarked. Volatility, a measure of how much a fund's price goes up or down as a percentage of its average performance. Yield to maturity, the total return anticipated on a bond if the bond is held until the end of its lifetime, excluding strategic currency hedges for Portfolio/Benchmark calculations. Yield to worst, the lowest potential yield that can be received on a bond without the issuer actually defaulting, excluding strategic currency hedges for Portfolio/Benchmark calculations.

6 HSBC Global Investment Funds - Global Asset-Backed Bond Supplement Information Sheet Performance (%) Return Currency YTD 1M 3M 6M 1Y 3Y 1 AC AC (Net) AM AM2 (Net) AM3HAUD AUD AM3HAUD (Net) 2 AUD Y 1 Since Inception Calendar Year Performance (%) Return Currency AC AC (Net) 2 AM2 AM2 (Net) 2 AM3HAUD AUD AM3HAUD (Net) 2 AUD 1 Result is annualised when calculation period is over one year. 2 Net of relevant prevailing sales charge Past performance is not an indicator of future returns. The figures are calculated in the share class base currency, dividend reinvested. Share Class Base Currency Distribution Frequency Dividend ex-date Last Paid Dividend Annualised Yield AM2 Monthly 29 Aug % AC AM3HAUD AUD Monthly 29 Aug % The above table cites the last dividend paid within the last 12 months only. Dividend is not guaranteed and may be paid out of distributable income, capital or both, which could result in capital erosion and reduction in net asset value. A positive distribution yield does not imply a positive return. Past payout yields and payments do not represent future payout yields and payments. The calculation method of annualised yield: (dividend value / NAV per share or unit as of ex-dividend date) x n, n depends on the distributing frequency. Annually distribution is 1; semi-annually distribution is 2; quarterly distribution is 4; monthly distribution is 12. The annualised dividend yield is calculated based on the dividend distribution on the relevant date with dividend reinvested, and may be higher or lower than the actual annual dividend yield. Investors and potential investors should refer to the details on dividend distributions of the Fund, which are available on HSBC Global Asset Management (Singapore) Limited website. Share Class Inception Date ISIN Base Currency Min. Initial Investment NAV per Share Annual Management Fee Distribution Type AM2 AC AM3HAUD LU LU LU AUD 1,000 1,000 AUD 1, % 0.90% 0.90% Distributing Accumulating Distributing Different classes may have different performances, dividend yields and expense ratios. For hedged classes, the effects of hedging will be reflected in the net asset values of such classes. Expenses arising from hedging transactions may be significant and will be borne by the relevant hedged classes. Hedged class performs the required hedging on a best efforts basis. Source: HSBC Global Asset Management, data as at 31 August 2018