HSBC Global Investment Funds - European Equity S Share Class 30 Sep 2018 30/09/2018 Fund Objective and Strategy Investment Objective The Fund seeks long-term total return (meaning capital growth and income) by investing primarily in shares (or securities that are similar to shares). These are shares issued by companies that have a registered office and official stock-market listing in Europe. Investment Strategy The Fund holds a range of sectors and stocks, providing diversification. The Fund can also invest up to 10% of its assets in Real Estate Investment Trusts (shares in property companies) and up to 10% of its assets in collective investment schemes including other sub-funds of HSBC Global Investment Funds. There aren t restrictions on the market values (also known as market capitalisation) of the companies held in the Fund. See the Prospectus for a description of derivative usage. Performance (%) YTD 1M EUR -2.77 EUR (Net) 2-7.87 Benchmark EUR 3M 1Y 3Y¹ 5Y¹ Since Inception¹ 1.32 0.07-1.15 2.81 5.50 7.63-4.00-5.18-6.34 0.98 4.37 7.40 0.84 0.53 1.33 1.47 6.29 6.92 Beta 1.01 - Manager Share Class Details UCITS V Compliant Subscription Mode Distribution Type Distribution Frequency Dealing Frequency Yes Cash / SRS (Supplementary Retirement Scheme) Distributing Annually Daily 17:00 Luxembourg Calendar Year Valuation Time 2013 2014 2015 2016 2017 Performance (%) Min. Initial Investment EUR 1,000 EUR 19.07 5.89 14.07-4.97 11.35 Annual Management Fee 1.00% EUR (Net) 2 12.82 0.33 8.08-9.96 5.50 Max. Initial Charge 5.00% 20.25 6.84 8.22 2.58 10.24 Benchmark EUR Base Currency EUR Domicile Luxembourg 3-Year Risk ISIN LU0047473722 Characteristics Fund Measures Benchmark Benchmark Inception Date 12 Nov 1993 Volatility 11.4% 10.5% Number of Holdings NAV per Share EUR 39.82 61 445 Tracking ex Cash Fund Size EUR 76,145,817 4.3% - Error Avg Market Bloomberg Ticker HSBPEUI LX Information Cap (EUR 52,629 59,313-0.82 - mil) MSCI Europe Net Ratio Benchmark 7.62 Samir Essafri 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 is over one year. 2 Net of relevant prevailing sales charge 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. Market Risk: The value of investible securities can change over time due to a wide variety of factors, including but not limited to: political and economic news, government policy, changes in demographics, cultures and populations, natural or human-caused disasters etc. 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.
Monthly Performance Commentary Performance The fund outperformed mixed global markets impacted by continuing uncertainty, with fears of Emerging Markets contagion offsetting the positives from stronger US data. In this context, our Value tilt behaved well in September. Over the month, sector allocation was positive. We benefited from our underweight to expensive and consensual sectors like Consumer Goods and Technology, both sectors performing poorly over the month. We also benefited from our main sector overweights, notably Healthcare, Materials and to a lesser extent Financials. Also our selected exposure to Energy contributed positively. On the negative side, Industrials and Consumer Services (Ad agencies and Food Retail mainly) were the main detractors. The stock selection did well over the month, top contributors being ThyssenKrupp (strong conviction initiated recently), group announcing its intention to split the company into two separate and independent listed companies as part of a massive restructuring, and simplification of the conglomerate structure of the company. Even if the process will take time, we think this is a key step to unlock massive value. Casino (new position initiated in September) has been also been a positive contributor over the month. Casino is an international multiformat, multi-channel retailer (5th biggest grocer in France) based on strong and differentiating franchises in the convenience segment (Franprix and Monoprix). Internationally, Casino has controlling stakes in Brazil's leading retailer, GPA, and also in Exito (Colombia). Recent volatility and concerns (overdone) regarding debt situation of its parent company (Rallye) has created a massive disconnect with the strong fundamentals of the operating assets of the Casino group, providing a clear investment opportunity and a good entry point for us. At current share price levels, market under appreciate high asset quality (in premium locations and strong operational execution). The group is delivering on his strategy and has significant and under-appreciated operating leverage (accelerating improvement in its core French market), recent and ongoing asset disposals and credit lines give it good liquidity. On top of this, we see upside risk from continuing recovery of its Latam and notably Brazilian operations (currently well below pre-crisis levels). Among Consumer Staples, Reckitt Benckiser continued to perform strongly. Likewise, Volkswagen benefited from easing trade tensions and an improved market perception thanks to an accelerating top line combined with a low valuation and a strong restructuring potential (cost base + asset disposals). Within Financials, Axa rebounded nicely over the month, the market having digested the XL acquisition, management having done a good job explaining the rational of the acquisition which derisks Axa group profile swapping financial risk in the US (guaranteed contracts) for insurance / technical risk in XL. Investor day 28th November should be another positive catalyst for the stock. Rio Tinto also performed strongly in September thanks to a supportive commodities environment combined with strong fundamentals (best in class assets at the bottom of the cost curve, strong balance sheet and FCF allowing step up in cash return). Main detractors were Danske Bank : sell off triggered by a money laundering scandal, investors adding a significant risk premium related to the uncertainty around size of potential fines (highest fine estimates seen at USD 1.5-2 bn vs market value plunging USD 15 bn ). And WPP which suffered from a cautious outlook from the new CEO. Portfolio adjustments Over the month, we took advantage of the market volatility to selectively add on a few names notably Prudential, BHP Billiton and ThyssenKrupp, and as mentioned, we initiated a position in Casino (details above). On the other hand, we exited Nestlé for valuation reasons, the stock having performed very well over the last few weeks. Outlook Trade wars, global growth concerns, political turmoil in Europe and EM contagion are the biggest threats to markets going forward, but investors positioning has adjusted a lot already, clearly much is already in the price in our view. Global growth remains healthy despite near term weakness, we remain convinced that it is premature to call end of the cycle even if we are late in the investment cycle. We still see a supportive combination of ongoing corporate earnings growth especially in Europe (Europe being earlier in its market and macro cycle) and valuation support providing a platform for decent equity returns when 2019 cycle extension, including higher ECB rates, is confirmed. Thus, we maintain a constructive stance especially regarding our Value tilt, as despite recent outperformance, the Value factor remains extremely cheap to the extent that the discount on Value now rivals the extremes seen during the ERM crisis, the Tech Bubble, the Financial Crisis, the Sovereign Debt Crisis and the Brexit vote. We thus definitely stick to our selective pro-value tilt and confirm our overweight positioning on Financials, late-cyclical Industrials, Healthcare and Telecoms, and we keep avoiding peak earnings, peak valuation Luxury segment as well as Technology segment.
Sector Allocation (%) Geographical Allocation (%) Financials Health Care Industrials Materials Energy Consumer Staples Telecommunication Services Consumer Discretionary Information Technology Utilities Real Estate Cash & Others -0.31 24.70 19.15 15.03 13.09 14.99 13.15 11.40 8.39 8.94 8.56 7.24 13.35 6.50 3.18 6.12 10.57 3.48 5.61 1.91 3.57 0.00 1.38 0.00 United Kingdom Germany France Netherlands Switzerland Italy Spain Ireland Australia Denmark Cash & Others 19.87 14.97 18.84 17.32 9.84 4.46 7.45 13.28 4.86 3.34 3.59 4.62 1.91 0.90 1.88 0.66 1.55 2.66 3.56 9.65 26.66 28.14 Benchmark Benchmark Top 10 Holdings (%) Location Sector Weight (%) Novartis AG Switzerland Health Care 3.48 Royal Dutch Shell PLC United Kingdom Energy 3.25 AstraZeneca PLC United Kingdom Health Care 2.77 Prudential PLC BP PLC Bayer AG Siemens AG Allianz SE Societe Generale SA Banco Santander SA United Kingdom Financials 2.67 United Kingdom Energy 2.49 Germany Health Care 2.44 Germany Industrials 2.34 Germany Financials 2.32 France Financials 2.27 Spain Financials 2.15 Index Disclaimer Source: MSCI. The MSCI information may only be used for your internal use, may not be reproduced or redisseminated in any form and may not be used as a basis for or a component of any financial instruments or products or indices. None of the MSCI information is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such. Historical data and analysis should not be taken as an indication or guarantee of any future performance analysis, forecast or prediction. The MSCI information is provided on an as is basis and the user of this information assumes the entire risk of any use made of this information. MSCI, each of its affiliates and each other person involved in or related to compiling, computing or creating any MSCI information (collectively, the MSCI Parties ) expressly disclaims all warranties (including, without limitation, any warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for a particular purpose) with respect to this information. Without limiting any of the foregoing, in no event shall any MSCI Party have any liability for any direct, indirect, special, incidental, punitive, consequential (including, without limitation, lost profits) or any other damages. (www.msci.com)
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 049320 Telephone: (65) 6658 2900 Facsimile: (65) 6225 4324 Website: www.assetmanagement.hsbc.com/sg Company Registration No. 198602036R Should there be any discrepancy, the English version shall prevail
HSBC Global Investment Funds - European Equity Supplement Information Sheet 30 Sep 2018 Performance (%) 3Y 1 5Y 1 Since Return Currency YTD 1M 3M 6M 1Y Inception 1 EUR EUR -2.77 1.32 0.07 0.78-1.15 2.81 5.50 7.63 EUR (Net) 2 EUR -7.87-4.00-5.18-4.51-6.34 0.98 4.37 7.40 SGD SGD -3.84 0.87-0.24-0.83-2.28 2.80 4.08 7.01 SGD (Net) 2 SGD -8.89-4.42-5.48-6.03-7.41 0.97 2.96 6.78 USD USD -5.95 1.15-0.45-4.82-2.88 4.18 2.32 7.67 USD (Net) 2 USD -10.89-4.16-5.68-9.82-7.98 2.32 1.22 7.44 Calendar Year Performance (%) Return Currency 2013 2014 2015 2016 2017 EUR EUR 19.07 5.89 14.07-4.97 11.35 EUR (Net) 2 EUR 12.82 0.33 8.08-9.96 5.50 SGD SGD 28.63-2.41 9.63-6.04 17.26 SGD (Net) 2 SGD 21.88-7.53 3.88-10.97 11.11 USD USD 24.44-7.01 2.40-7.73 26.77 USD (Net) 2 USD 17.91-11.90-2.97-12.57 20.11 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 EUR Annually 11 Jul 2018 1.045798 2.63% 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 12 Nov 1993 LU0047473722 EUR EUR 1,000 39.82 1.00% 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.