HSBC Global Investment Funds - Global Emerging Markets Bond

Transcription

1 HSBC Global Investment Funds - Global Emerging Markets Bond S Share Class 30/06/2018 Fund Objective and Strategy Investment Objective The Fund invests for total return (meaning capital growth and income) primarily in a diversified portfolio of bonds. These bonds are generally issued or guaranteed by companies, governments, government agencies and supranational bodies registered or based in emerging markets. Investment Strategy The fund s assets include investment-grade securities (rated as such by a credit ratings agency), non-investment grade securities and other similar securities. Most of the fund s holdings are denominated in US dollars. The Fund can invest up to 30% of its assets in securities issued by or guaranteed by a single sovereign issuer with a non-investment grade credit rating. Up to 10% of the Fund s net assets may be invested in onshore Chinese bonds. The Fund may invest up to 10% of its net assets in convertible securities (bonds that convert to equities). The Fund can also invest up to 10% of its assets in contingent convertible securities. See the Prospectus for a full description of the investment objectives and derivative usage. Since Inception Performance (%) Fund Share Class Details UCITS V Compliant Subscription Mode Distribution Type Distribution Frequency Dealing Frequency Valuation Time Min. Initial Investment Yes Cash / SRS (Supplementary Retirement Scheme) Distributing Annually Daily 17:00 Luxembourg 1,000 Performance (%) YTD 1M 3M 1Y 3Y¹ 5Y¹ Since Annual Management Fee 1.25% Inception¹ Max. Initial Charge 3.00% Base Currency (Net) Domicile Luxembourg ISIN LU Inception Date 11 Jan 2011 NAV per Share Calendar Year Performance (%) (Net) Past performance is not an indicator of future returns. The figures are calculated in the share class base currency, dividend reinvested. Source: HSBC Global Asset Management, data as at 30 June Risk Disclosure 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. Emerging Markets Risk: The Fund may invest in Emerging Markets, these markets are less established, and often more volatile, than developed markets and involve higher risks, particularly market, liquidity and currency risks. 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. Fund Size Bloomberg Ticker Manager 3,727,120,011 HSGEAUD LX JP Morgan EMBI Global Zeke Anurag Diwan Nishant Upadhyay 1 Result is annualised when calculation period is over one year. 2 Net of relevant prevailing sales charge

2 HSBC Global Investment Funds - Global Emerging Markets Bond Share Class 3-Year Risk Measures Volatility 5.8% 5.6% Volatility 6.0% 5.8% Sharpe Ratio Sharpe Ratio Tracking Error 1.0% - Tracking Error 1.3% - Information Ratio Information Ratio Rating Average 5 BB BBB- - Yield to Worst (Gross) Maturity Average AAA Sovereign (Hard Ccy) AA Quasi (Hard Ccy) A Corporate (Hard Ccy) BBB Local FX BB Local Sovereign Bonds B Cash CCC CC C NORATING Sorted from highest to lowest rating. Cash is not included in any rating. Turkey Mexico Argentina Indonesia < 1 Year Russian Federation y Brazil y Colombia y Egypt y Peru y China y Others Sorted from shortest to longest per the length of maturity. Only top 10 breakdowns are displayed. Other breakdowns are included in Others RUB MXN COP TRY EUR GBP CHF JPY SGD Others Only top 10 breakdowns are displayed. Other breakdowns are included in Others. Characteristics Fund Average Coupon Option Adjusted Duration (O) 3 Credit Quality Rating Allocation (EE%) Fund Maturity Breakdown (EE%) Fund Currency Allocation (EE%) Fund 5-Year Risk Measures Relative Characteristics Fund Sorted from largest to smallest per Economic Exposure. Option Adjusted Spread Duration (OASD) Relative Sector Allocation (EE%) Fund Geographical Allocation (EE%) Fund 3 O, Option Adjusted Duration, excludes interest rate futures, bond futures and excess return from interest rate swaps. 4 OASD, Option Adjusted Spread Duration, excludes interest rate futures, bond futures and excess return from interest rate swaps. 5 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. Source: HSBC Global Asset Management, data as at 30 June 2018

3 HSBC Global Investment Funds - Global Emerging Markets Bond Share Class Monthly Performance Commentary Monthly market review Emerging Markets Debt (EMD) posted negative performance in June as risk-off sentiment towards the asset class continued. The recent pickup in market volatility, has heightened investor nervousness, creating a dispersion in performance between investment grade (IG) sectors and high yield (HY) as investors have held on to their higher quality paper during this risk-off environment. This has particularly been the case within EM hard currency (JPM EMBI Global Index) with IG spreads moving marginally from 213bps to 217bps while HY spreads widened significantly from 602bps to 655bps. EM local debt also struggled over the month as investor outflows resulted in local yields rising from 6.41% to 6.59% while a small rise in US dollar strength (DXY index +0.52%) added to negative performance. Monthly performance & positioning During this risk-off environment, investor preference for higher quality paper saw the investment grade sector meaningfully outperform the high yield segment. Consequently, much of the underperformance over the month can be attributed to portfolio s tilt towards more attractively priced, yet higher beta, high yield portion of the investment universe. Within the investment grade sector, underweight positioning in higher quality, low beta countries with tight spread levels was detrimental to relative returns. Chief among these were allocations to China, Chile, Hungary and Poland. The largest detractor however was the underweight to Mexico as bonds rallied on the back of more conciliatory market rhetoric from Presidential candidate Lopez-Obrador as well as an unwinding of market short positioning in the month. Losses within investment grade were partially offset by relative gains from the overweight to Colombia as markets were buoyed by victory for business friendly candidate Duque. Security selection of shorter-dated bonds in South Africa also helped as disappointing economic data and deteriorating business confidence weighed on risk assets. Within high yield, the largest detractor to relative performance was the overweight positioning in higher beta Argentina, as risk assets continued to sell-off into June despite securing an IMF Stand-by agreement to support its financing requirements. The overweight to Egypt also dragged on returns as a stronger US dollar has raised concerns about debt servicing costs while the removal of oil subsidies is also likely to raise inflation rates. Elsewhere, an underweight to Russian sovereign bonds also detracted from performance as bond prices rose on the news of a pickup in GDP growth. However, these relative losses were tempered by outperformance from overweight positioning in improving growth stories in Central America and the Caribbean, notably Costa Rica and Dominican Republic which continue to benefit from strong US growth and US dollar remittances. Other meaningful outperformance came from the underweight to the Lebanon as US dollar strengthening continues to apply pressure to debt servicing liabilities. Finally, off-benchmark positioning in Local EM FX, particularly the Mexican peso, and EM Corporates added to relative returns, outperforming the benchmark. Outlook Recent EMD market volatility has stemmed from a culmination of negative factors, including uneven global growth, US dollar strength, Fed tightening and an escalation of trade tensions. While risk appetite has reduced in the second quarter, the re-pricing of emerging markets debt has resulted in a meaningful cheapening in valuations, particularly in hard currency where spreads are at their widest levels in 18 months. However, selectivity will continue to be paramount, particularly as we have witnessed a dispersion between sectors and countries and a rise in idiosyncratic risk. The economic backdrop has also shown some resilience. While disappointing European growth data at the start of the year saw some decoupling of the synchronized growth story it has not translated into a slowdown in emerging markets. Economic data has continued to be robust, benefitting from an uplift in global trade activity and a positive business environment across global markets. While recent US dollar strength has applied pressure to the asset class, we believe that this is only a temporary correction, spurred by a relative weakening in the euro and the flight to safety following an uptick in market volatility. The US dollar appears overvalued on a relative basis and the resumption of economic growth in other parts of the world should see a reversal of this recent trend. Speculative short positioning, as indicated by IMM data, has also been completely unwound, with the market now moving to a net long position. Therefore, absent a material shift in fundamentals, one should not expect to see a continuation of the trend of appreciation. Further support should also come from an easing of the negative supply/demand dynamic where a heavy supply calendar for H1 struggled to absorb investor flows, especially as heightened volatility resulted in more tepid demand. However, we estimate that with over 70% of forecast supply complete, this dynamic is likely to be more supportive for the remainder of the year. Despite this challenging environment, EMD investor flows still are still in positive territory ($19 billion) as global investors continue to be drawn by the compelling yield differential and solid fundamental story. We remain cognizant of the risks emanating from a more rapid increase in inflation in developed markets, possibly triggering more aggressive rate hikes than what is currently being priced into the market. Furthermore, any escalation in protectionism, vis-à-vis trade tariffs, could result in disruption to global trade although given the integrated nature of the global economy and the deeper political ramifications for the US, we believe that this is currently a low probability. The rise in idiosyncratic risk will also present both challenges and opportunities and in this environment we continue to position ourselves dynamically to opportunistically add risk at more attractive valuations as these pockets of volatility occur.

4 HSBC Global Investment Funds - Global Emerging Markets Bond Share Class Index Disclaimer Information has been obtained from sources believed to be reliable but J.P. Morgan does not warrant its completeness or accuracy. The Index is used with permission. The Index may not be copied, used, or distributed without J.P. Morgan's prior written approval. Copyright 2018, J.P. Morgan Chase & Co. All rights reserved. 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

5 HSBC Global Investment Funds - Global Emerging Markets Bond Share Class 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 (O), 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. Yield to worst, the lowest potential yield that can be received on a bond without the issuer actually defaulting.

6 HSBC Global Investment Funds - Global Emerging Markets Bond Supplement Information Sheet Performance (%) Return Currency YTD 1M 3M 6M 1Y 3Y 1 5Y 1 Since Inception 1 AC AC (Net) ACHCHF CHF ACHCHF (Net) 2 CHF EUR EUR EUR (Net) 2 EUR SGD SGD SGD (Net) 2 SGD (Net) AM2 SGD SGD AM2 SGD (Net) 2 SGD AM AM2 (Net) AM3HAUD AUD AM3HAUD (Net) 2 AUD AM3HEUR EUR AM3HEUR (Net) 2 EUR AM3HSGD SGD AM3HSGD (Net) 2 SGD ID ID (Net) PD EUR EUR PD EUR (Net) 2 EUR PD SGD SGD PD SGD (Net) 2 SGD PD PD (Net) Calendar Year Performance (%) Return Currency AC AC (Net) ACHCHF CHF ACHCHF (Net) 2 CHF EUR EUR EUR (Net) 2 EUR SGD SGD SGD (Net) 2 SGD (Net) AM2 SGD SGD AM2 SGD (Net) 2 SGD AM AM2 (Net) AM3HAUD AUD AM3HAUD (Net) 2 AUD AM3HEUR EUR AM3HEUR (Net) 2 EUR AM3HSGD SGD AM3HSGD (Net) 2 SGD ID ID (Net) PD EUR EUR PD EUR (Net) 2 EUR PD SGD SGD PD SGD (Net) 2 SGD PD PD (Net)

7 HSBC Global Investment Funds - Global Emerging Markets Bond Supplement Information Sheet 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 Annually 07 Jul % AC ACHCHF CHF AM2 Monthly 29 Jun % AM3HAUD AUD Monthly 29 Jun % AM3HEUR EUR Monthly 29 Jun % AM3HSGD SGD Monthly 29 Jun % ID Annually 07 Jul % PD Annually 07 Jul % The above table cites the last dividend paid within the last 12 months only. Dividend is not guaranteed and may be paid out of capital, which will 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. Historical payments may be comprised of both distributed income and capital. 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 AC ACHCHF AM2 AM3HAUD AM3HEUR AM3HSGD ID Base Currency Min. Initial Investment NAV per Share Annual Management Fee Distribution Type 11 Jan 2011 LU , % Distributing 06 Jan 2011 LU , % Accumulating 24 Sep 2012 LU CHF CHF 1, % Accumulating 05 Jan 2011 LU , % Distributing 04 Sep 2012 LU AUD AUD 1, % Distributing 12 Sep 2012 LU EUR EUR 1, % Distributing 18 Sep 2012 LU SGD SGD 1, % Distributing 18 May 2009 LU ,000, % Distributing PD 09 Jul 1999 LU , % 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 30 June 2018