HSBC Global Investment s RMB Fixed Income S Share Class AC AC 31/01/2019 Objective and Strategy Investment Objective The invests for total return (meaning capital growth and income) in a diversified portfolio of bonds. The bonds have exposure to the Chinese currency, the renminbi (RMB). The can invest in investmentgrade bonds (rated as such by a credit ratings agency), noninvestment grade and unrated bonds (which carry more risk), cash and money market instruments. Investment Strategy The RMB bond market is new and still developing, so opportunities to invest in RMB bonds are limited. Until the RMB bond market is fully developed, the might invest substantially in cash, deposits and other shortterm instruments. Up to 100% of the s net assets may be invested in onshore Chinese bonds. The may invest up to 10% of its net assets in convertible securities (bonds that convert to equities).the 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 (%) 130 125 120 115 110 105 100 95 90 Share Class Details UCITS V Compliant Subscription Mode Distribution Type Dealing Frequency Valuation Time Min. Initial Investment Yes Cash Accumulating Daily 17:00 Luxembourg 1,000 Annual Management Fee Performance (%) 3.00% Luxembourg AC 4.17 4.17 6.89 0.70 5.00 1.69 2.78 ISIN LU0692309627 AC (Net) 2 1.05 1.05 3.68 3.68 3.94 1.07 2.35 Inception Date 25 Oct 2011 NAV per Share 12.21 2.69 2.69 4.26 4.73 1.09 0.26 0.99 Size 110,948,857 Bloomberg Ticker HSRFAUA LX Calendar Year Performance (%) AC 0.73 2.56 2.21 11.42 1.06 AC (Net) 2 3.71 5.49 1.05 YTD 1M 3M 1Y 3Y¹ 5Y¹ 2014 2015 2016 2017 Since Inception¹ 5.14 8.08 4.02 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 31 January 2019 2018 3.14 3.94 9.04 3.90 Risk Disclosure The 's unit value can go up as well as down, and any capital invested in the may be at risk. The 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. The 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. The may be concentrated in a limited number of securities, economic sectors and/or countries and as a result, may be more volatile and have a greater risk of loss than more broadly diversified funds. Derivatives may be used by the, and these can behave unexpectedly. 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 occurs when the economic exposure is greater than the amount invested, such as when derivatives are used. A 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. Further information on the 's potential risks can be found in the Key Investor Information Document and Prospectus. Max. Initial Charge Base Currency Domicile Manager Offshore Renminbi Overnight Deposit Rate Gregory Suen Alfred Mui 1 Result is annualised when calculation period is over one year. 2 Net of relevant prevailing sales charge
HSBC Global Investment s RMB Fixed Income Share Class AC 3Year Risk Measures AC Volatility 5.72% 5.12% Volatility 5.83% 4.66% Sharpe Ratio 0.61 0.09 Sharpe Ratio 0.11 0.28 Tracking Error 2.28% Tracking Error 2.84% Information Ratio 1.71 Information Ratio 0.69 Characteristics Number of Holdings ex Cash 59 Option Adjusted Duration (OAD) 3 3.56 0.00 3.56 Rating Average 5 A+/A AAA Maturity Average 4.11 4.11 Yield to Worst (Gross) 3.85 3.85 Number of Issuers 36 Yield to Maturity (Gross) 3.93 3.93 Modified Duration to Worst 3.54 3.54 Sector Allocation (%) Credit Quality Rating Allocation (%) Government 36.87 Banks 28.15 AA 13.68 Real Estate 15.45 A 62.23 Diversified Finan serv 7.63 BBB 17.27 Consumer Cyclical 6.27 BB 3.56 Energy 2.15 NR 2.61 Utilities 2.09 Cash 0.66 Industrial 0.51 Sorted from highest to lowest rating. Cash is not included in Consumer Non cyclical 0.22 any rating. Cash 0.66 Maturity Breakdown (OAD) Sorted from largest to smallest per market values of weight. 02 years 0.44 25 years 0.97 Geographical Allocation (%) 510 years 1.44 China 65.54 10+ years 0.71 Hong Kong 8.19 Total 3.56 Australia 6.60 Sorted from shortest to longest per the length of maturity. South Korea 5.20 Germany 4.89 Top 10 Holdings (%) Weight (%) Netherlands 3.52 CHINA (PEOPLE'S REPUBLIC) 3.390 21/05/25 KOREA DEVEL BANK 4.585% SNR MT 4.585 15/02/21 CHINA(PEOPLES REP) 3.9% SNR 04 3.900 04/07/36 CHINA (PEOPLE'S REPUBLIC) 3.850 12/12/26 SINOCHEM OFFSHORE CAPITAL C 4.400 14/02/21 EXPORTIMPORT BANK OF CHINA 4.400 14/05/24 CHINA (PEOPLE'S REPUBLIC) 3.380 21/11/24 CHINA (PEOPLE'S REPUBLIC) 3.300 04/07/23 CHINA (PEOPLE'S REPUBLIC) 3.380 04/07/26 FRANSHION BRILLIANT LTD 5.200 08/03/21 3.40 Canada 2.77 2.86 United Kingdom 2.07 2.86 Hungary 0.29 2.79 Singapore 0.27 2.78 Cash 0.66 2.77 Sorted from largest to smallest per market values of weight. 2.73 2.71 2.70 2.64 5Year Risk Measures AC Relative Characteristics Relative Option Adjusted Spread Duration (OASD) 4 3.63 0.00 3.63 3 OAD, 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 31 January 2019
HSBC Global Investment s RMB Fixed Income Share Class AC Monthly Performance Commentary Review RMB bonds performed well in January across the curve and the credit spectrum. Further easing conditions in China and a generally more benign environment for risk assets and emerging markets led to falling yields. Meanwhile, the renminbi appreciated against the as the latter generally weakened and hopes for a better outlook for USChina relations were burnished. A more dovish narrative from the US Federal Reserve and seemingly good progress in trade negotiations saw the RMB rally by 2.7% against the in January. The exchange rate saw some two way volatility, sometimes pulled towards a stronger RMB by risk sentiment and a weaker, and at other times in the opposite direction by weaker Chinese economic data. However the weaker data and low inflationary pressures led to expectations of further easing action on the mainland and meant that bond yields fell. Meanwhile, the generally better sentiment in equity and credit markets meant that credit spreads were tighter, although the investment grade offshore market slightly outperformed the high yield equivalent. At the same time, offshore bonds marginally outperformed their onshore counterparts, although the difference was small and the trend over recent months has been strikingly similar, perhaps reflecting a greater homogeneity between the onshore and offshore RMB bond markets. Portfolio strategy The fund gained over the month and outperformed its benchmark index. There were modest inflows into the fund in January, and these were invested in line with the existing strategy of the fund. Overall duration was maintained at around 3.5 years, which is slightly longer than the average for the offshore market, but was beneficial to the fund in January as yields fell. Most of the longer dated exposure in the fund is made up of Chinese government bonds, with maturities as long as those maturing in 2036. Further purchases were made in bonds issued by both Chinese and global issuers, the latter including the Korean Development Bank and BMW Finance. These and the bonds issued by Chinese issuers were high quality investment grade names which offer a competitive yield compared to their low credit risk. The lack of any credit specific credit deterioration and the fall in yields across the fund led to a performance which generally outperformed market averages in January. Outlook Towards the end of the month, US Treasury Secretary Mnuchin s comment that the RMB will be part of the trade talks between the US and China confirmed our belief that the best mutual interest of the two countries remains in maintaining a relatively stable exchange rate between the and RMB. It is certainly the case that the stronger RMB in recent weeks has not been a consequence of an improving Chinese economy. It has been a general improvement in global sentiment, but crucially allied to a policy driven approach where domestic monetary conditions have been eased while the currency has been kept stable against a trade weighted basket. This may represent a very attractive environment for investors in RMB bonds. A combination of lower market driven domestic interest rates, together with a currency which is being stabilised may be skewing the distribution of outcomes in favour of bond investors. This comes on top of the simple technical framework where yields are very competitive on an interest rate risk adjusted basis, and the more complex issue of the inclusion of domestic Chinese government and policy bank bonds into the Bloomberg Global Aggregate in April. We expect that the latter will make investment into RMB bonds a much more mainstream activity for global investors and one which will encourage significant flows into the market.
HSBC Global Investment s RMB Fixed Income Share Class AC 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 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 #0601 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. This document has not been reviewed by the Monetary Authority of Singapore.
HSBC Global Investment s RMB Fixed Income Share Class AC Terms of Glossary Convertible bond: 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: a 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 fixedincome 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 / Noninvestment grade bond: 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: ratio of portfolio returns above/under the returns of a benchmark to the volatility of those returns. Investment grade bond: 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): 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 basispoint 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 riskadjusted 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/ calculations. Number is shown in percentage. 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/ calculations. Number is shown in percentage.
HSBC Global Investment s RMB Fixed Income Supplement Information Sheet Performance (%) Return Currency YTD 1M 3M 6M 1Y 3Y 1 5Y 1 Since Inception 1 AC 4.17 4.17 6.89 4.74 0.70 5.00 1.69 2.78 AC (Net) 2 1.05 1.05 3.68 1.59 3.68 3.94 1.07 2.35 ACOSGD SGD 4.07 4.07 6.62 4.21 ACOSGD (Net) 2 SGD 0.95 0.95 3.42 1.08 AM2 4.18 4.18 6.89 4.74 0.70 5.52 AM2 (Net) 2 1.05 1.05 3.68 1.59 3.68 3.52 AM3OSGD SGD 4.08 4.08 6.62 4.22 1.75 4.50 AM3OSGD (Net) 2 SGD 0.96 0.96 3.42 1.09 4.69 2.51 Calendar Year Performance (%) Return Currency 2014 2015 2016 2017 2018 AC 0.73 2.56 2.21 11.42 1.06 AC (Net) 2 3.71 5.49 5.14 8.08 4.02 ACOSGD SGD ACOSGD (Net) 2 SGD AM2 1.05 AM2 (Net) 2 4.02 AM3OSGD SGD 2.12 AM3OSGD (Net) 2 SGD 5.05 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 exdate Last Paid Dividend Annualised Yield AC ACOSGD SGD AM2 Monthly 0.033959 3.99% AM3OSGD SGD Monthly 0.026451 3.12% 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 exdividend date) x n, n depends on the distributing frequency. Annually distribution is 1; semiannually 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, 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 AC ACOSGD AM2 AM3OSGD 25 Oct 2011 28 Feb 2018 30 Jun 2017 30 Jun 2017 LU0692309627 LU1560771518 LU1560771435 LU1560771609 SGD SGD 1,000 SGD 1,000 1,000 SGD 1,000 12.21 9.88 10.22 10.17 Accumulating Accumulating Distributing 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 January 2019