HSBC International Select Fund. Multimanager solutions

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1 HSBC International Select Fund Multimanager solutions

2 Introduction About HSBC Multimanager This insert outlines funds managed by HSBC Multimanager and offered to you via the HSBC International Select Fund. Multimanager investing means that each fund contains a selection of investment managers, which can be chosen by the HSBC Multimanager team from both inside and outside the HSBC Group. The Multimanager approach has several features, including: Spreading your risk across a wide range of investment funds; Monitoring the underlying funds on a continuous basis to ensure your portfolio stays on track as conditions change; and Providing access, selection and monitoring of investment managers to ensure their strategy is suitable for the portfolio s aims. Why choose a Multimanager solution? Every investor faces the dilemma that no single investment manager is the best all of the time or can excel in managing all types of assets. So which one should you select? And if you opt for a variety of providers how do you achieve the right balance? Investing with HSBC Multimanager could help overcome this as the Multimanager team select what they believe to be the best managers in each asset class. The Multimanager team will monitor all the managers selected, replacing under-performers and continuously rebalancing the portfolios with the aim of maximising your growth potential and managing risk. We have committed substantial global resources to create a multimanager capability that allows us to identify and who we believe to be the world s most skilled investment managers for your benefit, wherever they are in the world. Local knowledge to find local talent We have multimanager professionals networked across nine major investment centres worldwide. From London to Hong Kong, from Toronto to Sao Paulo, our teams provide extensive coverage across both emerging and developed markets. Our analysts specialise by asset class and have an in-depth understanding of the dynamics within both local and global markets. Our on the ground presence means we can identify both talented managers, and the future rising stars in fund management at a very early stage. Bold, active decision making Through structured research and highly informed decision making, our multimanager teams can focus on taking bold, active decisions that they believe will positively contribute to the performance of each multimanager strategy. Our specialists use a range of tools to fully understand the fund managers investment process. They use that deep understanding to build portfolios that seek to create the most compelling blend of different managers. Swift to react when views change Each strategy and the underlying managers are then monitored and reviewed. Whenever we change our view on a manager, or identify a better opportunity, we will take swift, decisive action. Multimanager across world markets The HSBC International Select Fund range offers multimanager strategies across a broad range of markets and asset classes. 1

3 HSBC International Select Fund The Select Portfolio s are a fund of funds investment which invests in a number of other funds, as opposed to investing directly in assets such as shares and bonds. There are three asset allocation funds to choose from: Cautious, Balanced and Adventurous, each with a different investment objective and level of risk. The portfolios aim to achieve long term capital growth by investing in a broad selection of funds from a variety of fund managers. The common feature of all the funds within the HSBC International Select Fund is that they are managed by HSBC Multimanager. The funds available can be broadly split into two categories; MultiAlpha funds and the fund of funds portfolios: HSBC International Select Fund (Select) MultiAlpha B lends boutique m anagers with the aim of providing perform ance and controlling risk in each market and asset class Multimanager fund solutions Fund of funds portfolios Choose from a variety of portfolios with differing asset allocations with the aim of offering a choice of risk / reward profiles The investment process involves identifying the world s best managers and combining them effectively to achieve diversification and reduce your exposure to risk this strategy ensures your return is not dependent upon any one manager s performance. Each individual manager is selected for the following reasons: The strength of their investment personnel, process and ability to perform; and Their ability to complement the other managers within the structure by potentially enhancing the performance and risk characteristics of the combined portfolio Each of the underlying managers is monitored. Underperformers are replaced and a portfolio is rebalanced on an ongoing basis with the aim of maximising your growth potential and managing risk. Select fund of funds portfolios These portfolios are fund of funds investments which invest in a number of other funds, as opposed to investing directly in assets such as shares and bonds. There are four portfolios to choose from, depending on your attitude towards risk and reward. These are; Cautious Balanced Adventurous Multimanager Premium MultiAlpha MultiAlpha s global platform gives you access to what we consider to be the world s best boutique managers in each market and each asset class. The funds aim to produce alpha performance that outperforms the indices to which they are benchmarked. To try and achieve this, HSBC Multimanager assigns specialist managers to be responsible for a proportion of assets within each MultiAlpha fund. This strategy aims to control risk and deliver a superior performance. Cautious, Balanced and Adventurous portfolios Each of these portfolios has a different investment objective and level of risk. The portfolios aim to achieve long term capital growth by investing in a broad selection of funds from a variety of fund managers. The chart on the next page outlines each portfolio with its associated risk. Please refer to the simplified prospectus and full prospectus before making an investment decision. As with any investment where the underlying investments are stocks and shares, the price of shares in HSBC Global Investment Funds and any income from them can go down as well as up, is not guaranteed, and you may not get back the amount of your original investment. 2

4 This chart illustrates the relative risk and reward characteristics of the Cautious, Balanced and Adventurous portfolios. Actual asset allocations may vary slightly. Fixed Income 0% Adventurous Equities 100% Fixed Interest 0% Adventurous Equities 100% Potential Reward Fixed Income 30% Balanced Equities 70% Balanced Equities 70% Fixed Interest 30% Fixed Income 70% Cautious Equities 30% Cautious Equities 30% Fixed Interest 70% Risk This chart is to illustrate the relative risk and reward characteristics of the Select Portfolio s. With more potential reward comes more potential risk. Please note the percentages above are subject to change. Benchmark A benchmark is a standard against which the performance of a security, index or fund can be measured and is used to compare investment performance. It is a control mechanism to ensure the investment manager knows the level of performance he or she is aiming to exceed. This chart details the benchmark composition for each of the Cautious, Balanced and Adventurous portfolios: MSCI AC World Index Citigroup World Government Bond Index Lehman Aggregate Index Cautious Balanced Adventurous 30% 70% 100% 35% 15% 0% 35% 15% 0% 3

5 Dealing times Benchmarks - about the indices The MSCI All Countries (AC) World Index is an equity market cap weighted index reflecting the stocks, country and industry profiles of the 48 developed and emerging markets around the globe. The Citigroup World Government Bond Index currently includes the sovereign bonds of 22 countries deemed suitable for global investors based on quality, size, pricing and currency. The Lehman Aggregate Index is a market capitalisation weighted index, representing US traded investment grade bonds. It is included to reduce US dollar currency risk as it covers the US bond market only. Multimanager Premium Portfolio The Multimanager Premium is also a fund of funds solution. It aims to deliver a positive return over the medium term, whatever the market trends, by investing in a broad selection of funds run by a number of fund management companies. Benchmark The portfolio has no benchmark or asset class weighting constraints and because of this the fund managers have much greater flexibility when selecting the underlying funds. This means that, whereas the other funds in the Select range would rise and fall with their relative benchmark(s), Multimanager Premium aims to preserve capital and provide a return, whatever the market trends. Portfolio Structure Multimanager Premium s main aim is to control risk and maintain capital. In order to do this, the portfolio will use what the HSBC Multimanager team consider to be the best possible diversification of asset classes and strategies. It will invest in investment funds from both inside and outside the HSBC Group, which in turn invest primarily in equity and fixed income markets. In addition, some investment funds may provide exposure to commodities, real estate and open-ended regulated hedge funds. MultiAlpha Instructions should be received by us before 5pm (Jersey time). The share price will be calculated two business days later. Select fund of funds portfolios - Cautious, Balanced and Adventurous For instructions received by us before 10am (Jersey time) the share price will be calculated on the following business day. For instructions received by us after 10am (Jersey time) the share price will be calculated two business days later. Select fund of funds portfolios - Multimanager Premium Portfolio Instructions should be received by us before 3pm (Jersey time). The share price will be calculated two business days later. Charges Initial charges The initial charge is a one off fee and therefore will not be refunded if you decide to cash in your investment. Annual management charge Naturally there are charges involved when you make any type of investment. An annual management charge (AMC) may also be levied by the underlying funds although a proportion of this will usually be rebated back to the Portfolio. Please see the relevant prospectus for more details. Please refer to the International Investment Funds brochure for more information and the Prospectus and Simplified Prospectuses for full up-to-date details of the charges. Sell, switch, buy You can give us further instructions to buy, sell, switch or top up your investment easily by phone or fax. Currency While you can invest in Multimanager Premium in a choice of currencies, please note that Multimanager Premium is euro denominated. 4

6 Tax Key risks All investors using the nominee service will have their redemption proceeds from the HSBC International Select Fund paid without the deduction of any tax. It is our understanding that for investors using the nominee service the HSBC International Select Fund is outside the scope of the European Savings Directive (ESD) that became effective on 1 July The accuracy of this information or its completeness cannot be guaranteed. If you require specific details in respect of this legislation we strongly recommend that you consult with your tax or legal adviser, as we cannot provide individual guidance on personal tax matters. You may be liable to personal taxation on the profits, income and gains realised from, or accruing within, the underlying investments under the domestic tax laws of the country in which you are resident and/or country in which you are liable to taxation. The tax treatment of your investment depends upon your personal circumstance and may be liable to change in the future we therefore recommend that you seek independent tax advice as to the treatment of your investments if you decide to invest through this service. Market A broad range of funds are available from both developed and emerging markets. Some funds focus on one particular country, geographic region or sector whereas others are spread throughout the globe. These factors can affect the level of volatility and potential for return. Investments in emerging markets are by their nature higher risk and potentially more volatile than those inherent in established markets. Emerging markets are generally, but not exclusively, those that are not within the United States, Canada, Switzerland and members of the European Economic area, Japan, Australia and New Zealand. Currency Funds can be used strategically to achieve currency exposure. Where your base currency differs from the currency in which the fund is denominated, or where the investment manager buys stocks and shares in currencies other than that of the fund, you will have an exchange rate exposure, which could affect the value of your investment. Asset type Broadly speaking, higher risk funds invest entirely in equities and gain exposure to stock market fluctuations; they also have the potential for higher returns than other assets. Bond related funds also risk your capital, however the assets in these funds reflect a less volatile market with greater security. Therefore they may offer a lower potential return. As with any investment where the underlying investments are stocks and shares, the price of shares in HSBC International Select Fund and any income from them can go down as well as up, is not guaranteed, and you may not get back the amount of your original investment. Remember, these funds should be considered as a medium to long-term commitment, for example at least five years Please see relevant Simplified Prospectus and Prospectuses for more information. 6

7 Important notes Any decision to invest in HSBC International Select Fund should be based on the content of the Prospectus, Application Terms and Conditions and Nominee Service Agreement. UK and Isle of Man investors will not be protected by statutory compensation arrangements if they invest in any of the HSBC International Select funds. Should a fund fail, investors are reminded that they will be excluded from the benefit of the rules andregulations made under the UK Financial Services and Markets Act 2000 including the UK Financial Services Compensation Scheme. For further details on these sub-funds and past performance please or charges visit the web site at: or call (Monday to Friday exc. UK Bank Holidays, 9am to 5pm UK time). To help us continually improve our services and in the interests of security we may monitor and/or record your communications with us. The above is not a full list of all the risks that apply to the funds within HSBC Global Investment Funds. Investors and potential investors should read the relevant simplified prospectus or full prospectus for a full list of risk warnings prior to making an investment in a fund. 6

8 This offer is not available to residents of Australia, Canada, Hong Kong, Malaysia, United States of America or New Zealand. This is an integral part of the HSBC Freedom Plus brochure and should be read in conjunction with it. Please refer to the main brochure for additional important information. Before investing in any of the products in the HSBC International Select Fund range, please read the full Prospectus and the sub-funds relevant Simplified Prospectus for more information and a detailed explanation of the risks involved. HSBC Global Asset Management (International) Limited All Rights Reserved BRO0161/08/2009