HSBC Global Investment s - India Fixed Income SG Share Class AC AC 31/03/2018 Objective and Strategy The aims to provide long-term total return (meaning capital growth and income) by investing in a portfolio of Indian bonds. In normal market conditions, at least 90% of the s assets are invested in investment-grade bonds (rated as such by a credit ratings agency), non-investment grade or unrated bonds (which carry more risk) and other similar securities. The can invest in bonds issued the Indian government, its government agencies, and Indian companies. The s assets can be denominated in Indian rupee and the US dollar. The can also invest in other instruments, e.g. structured notes referencing underlying exposure to Indian Rupee bonds and cash. Investment in Indian domestic fixed income securities may from time to time be restricted by Indian domestic regulation and hence the may have substantial exposure to non-indian Rupee denominated investments outside of India. The can also invest up to 10% of its assets in contingent convertible securities. These are bonds that convert to equities (carrying increased risk) if the issuer runs into difficulty. However, this exposure is not expected to exceed 5%. See the Prospectus for a description of derivative usage. Since Inception Performance (%) Share Class Details UCITS V Compliant Yes 140 130 120 110 100 90 80 Subscription Mode Distribution Type Dealing Frequency Valuation Time Min. Initial Investment Cash Accumulating Daily 17:00 Luxembourg 1,000 Performance (%) YTD 1M 3M 1Y 3Y¹ 5Y¹ 3.00% Luxembourg AC -1.65 1.12-1.65 1.79 4.33 3.31 4.28 ISIN LU0780247804 AC (Net) 2-4.60-1.91-4.60-1.26 3.27 2.68 3.71 Inception Date NAV per Share 20 Aug 2012 12.65 Calendar Year Size 911,628,949 2013 2014 2015 2016 2017 Performance (%) Bloomberg Ticker HSIFIAU LX AC -8.67 11.80 2.59 8.28 8.23 Manager Gordon Rodrigues AC (Net) 2-11.41 8.44-0.49 5.03 4.98 Past performance is not an indicator of future returns. The figures are calculated 1 Result is annualised when calculation period in the share class base currency, dividend reinvested. is over one year. Source: HSBC Global Asset Management, data as at 31 March 2018 2 Net of relevant prevailing sales charge Risk Disclosure Since Inception¹ General Investment Risk: The value of investments and any income from them can go down as well as up and you may not get back the amount originally invested. Contingent Convertible Security (CoCo) Risk: Under certain circumstances CoCos can be converted into shares of the issuing company, potentially at a discounted price, or the principal amount invested may be lost. Derivative Risk: A small movement in the value of the underlying asset can cause a large movement in the value of the derivative. Investing in derivatives involves leverage. High degrees of leverage can magnify the impact of asset price or rate movements. Emerging Market Risk: Emerging markets are subject to greater illiquidity and volatility than developed markets. Exchange Rate Risk: Changes in currency exchange rates will cause the value of investments to fluctuate. Fixed Income Risk: As interest rates rise debt securities will fall in value. All credit instruments have potential for default. High Yield risk: Higher yielding securities characteristically bear greater credit risk than investment grade securities. Interest Rate Risk: Relative yield and the capital values may be reduced by rising interest rates. Annual Management Fee 1.09% Max. Initial Charge Base Currency Domicile
HSBC Global Investment s - India Fixed Income Share Class AC 3-Year Risk Measures AC 5-Year Risk Measures AC Volatility 6.2% Volatility 9.8% Sharpe Ratio 0.55 Sharpe Ratio 0.27 Tracking Error - Tracking Error - Information Ratio - Information Ratio - Characteristics Characteristics Current Yield (Gross) 7.33 Number of Holdings ex Cash 78 Modified Duration to Worst 5.05 Average Coupon 7.34 Maturity Average 7.03 Option Adjusted Duration Number of Issuers 29 (OAD) 3 5.09 Yield to Worst (Gross) 7.79 Yield to Maturity (Gross) 7.80 Credit Quality Rating Allocation (%) Sovereign 37.47 Quasi-sovereign 22.79 Financial 17.59 BBB 43.92 Oil & Gas 7.00 BB 1.60 Bank 6.44 NR 52.73 Utility 6.10 Cash 1.75 Sorted from highest to lowest rating. Cash is not included in any Industrial 0.87 rating. Cash 1.75 Maturity Breakdown (OAD) Sorted from largest to smallest per market values of weight. 0-2 years 0.04 2-5 years 1.11 5-10 years 2.82 10+ years 1.12 Cash 0.00 Total 5.09 Sorted from shortest to longest per the length of maturity. Sector Allocation (%) 3 OAD, Option Adjusted Duration, excludes interest rate futures, bond futures and excess return from interest rate swaps. Source: HSBC Global Asset Management, data as at 31 March 2018
HSBC Global Investment s - India Fixed Income Share Class AC Monthly Performance Commentary Review The India government bond market rebounded in March from its previous weakness and ended the month among the best performing markets in the Asian region. India government bond yields went down across the curve by around 25 bps on average, with a surprise cut in government security issuance in H1 FY 2018-19. Meanwhile, largely led by a fall in vegetable prices, headline CPI inflation also came in lower than expected in February and slowed to 4.4% yoy from 5.1% in January. The Indian rupee (INR) ended flat against the US dollar, as outflows from the domestic debt market in the month were largely offset by inflows into the equity market. On 26 March, the Reserve Bank of India (RBI) announced the much awaited government securities issuance calendar for H1 FY 2018-19. Gross issuance in the period will be 23% less than that in H1 FY 2017-18. This will constitute only 48% of the full-year budgeted borrowing while usually the government frontload 60-65% of the borrowing to the first half of the year. Meanwhile, net government securities supply will be about 14% lower than that in H1 FY 2017-18. In addition, the government plans to launch inflation indexed government bonds linked to CPI and to start issuing bonds in 1-5Y maturity buckets. There is now a relatively smaller portion of conventional bond supply in the medium and long-dated maturity buckets. The announcement sent the benchmark 10 year government bond yield down by around 30 bps. Portfolio strategy The fund rebounded in March in terms, as the fund s exposure to India government bonds and domestic quasi sovereign issues added value with the broad decline in India government bond yields. On the other hand, the fund s positions in -denominated bonds weighed on the fund s performance given the widening in credit spread of India dollar credit amid broad risk off sentiment in March. In the month, amid inflows into the fund, we continued to add selectively to state government loan (SDL) securities for their attractive spread against central government bonds. Meanwhile, we also selectively added to corporate bonds to maintain carry in a stable interest rate environment. However, we still favour domestic government bonds given balanced growth-inflation dynamics and expectation of the RBI to remain on hold in the near term. As of now, we still remain cautious of -denominated corporate bonds with expectations of continued US monetary policy normalisation. However, with US Treasury yields having reached relatively attractive levels and some spreads having widened out as well, going forward we may tactically add to bonds in this space as synthetic INR yields have started to look attractive for some of these bonds on a tax adjusted basis. Outlook We believe this is a good entry point into the Indian bond market, given that the market has been weak over the last 6-8 months, and yields have picked up significantly. We are seeing very high real interest rates given that inflation has come down in February to 4.44% which is well below RBI s upper bound inflation target of 6%. Following the rebound in March, we note that India government securities still offer one of the highest real yields within Emerging Market high yielders. A further downward surprise in inflation following two consecutive months of downward surprises could lead to a reassessment of inflation risks and should support a compression of real yields at the long-end of the curve. In addition, the RBI announced in early April that it will allow banks to spread out mark-to-market losses on their investment portfolio and will increase the ceiling on foreign investment in government securities gradually to 6% of outstanding securities over the next two years from 5% currently should also be generally positive for the strategy. These, together with lower government borrowing in H1 2018-19 should help improve demand/supply dynamics in the near term, stabilise investors sentiments and offset the negative effect from reduced investment appetite from public sector banks. The immediate threat of an interest rate hike which people had been expecting is diminished for the time being. At the same time there is no significant threat to the Indian economy, though some investors are becoming nervous ahead of the general elections in 2019. However, we believe it would be too late to buy into this market after the election because if Mr. Modi is re-elected as Prime Minister, bond yields could immediately fall significantly. Therefore we think it is a good time to invest in Indian bonds now, and we don t expect the weakness of last year to continue. In addition, investors are protected quite a lot from any other kind of volatility -i.e. volatility in capital or currency by the very high yields available in this market. Even in an environment of rising yields or a slightly weaker Rupee, investors can still make positive returns from the strategy due to the high carry. In addition, Indian bonds also are a good diversifier in a global bond portfolio.
HSBC Global Investment s - India Fixed Income Share Class AC Important Information This document is prepared for general information purposes only and does not have any regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive it. Any views and opinions expressed are subject to change without notice. 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. 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. Investors may wish to seek advice from a financial adviser before purchasing units in the fund. Investment involves risk. Past performance of any fund or the manager, and any economic and market trends or forecasts are not necessarily indicative of the future or likely performance of the fund or the manager. Unit values and income therefrom may fall as well as rise and the 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 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. Yield to worst, the lowest potential yield that can be received on a bond without the issuer actually defaulting.
HSBC Global Investment s - India Fixed Income Supplement Information Sheet Performance (%) Return Currency YTD 1M 3M 6M 1Y 3Y 1 5Y 1 Since Inception 1 AC -1.65 1.12-1.65-0.39 1.79 4.33 3.31 4.28 AC (Net) 2-4.60-1.91-4.60-3.37-1.26 3.27 2.68 3.71 ACSGD SGD -3.59 0.14-3.59-3.90-4.57 - - 2.96 ACSGD (Net) 2 SGD -6.48-2.86-6.48-6.78-7.43 - - 1.62 AD -1.65 1.12-1.65-0.39 1.78 4.31 3.30 2.89 AD (Net) 2-4.60-1.91-4.60-3.37-1.27 3.26 2.67 2.29 AM2-1.64 1.12-1.64-0.38 - - - - AM2 (Net) 2-4.59-1.92-4.59-3.36 - - - - AM3OSGD SGD -1.90 1.06-1.90-0.78 - - - - AM3OSGD (Net) 2 SGD -4.84-1.97-4.84-3.76 - - - - ID -1.49 1.18-1.49-0.06 2.44 4.99-5.56 ID (Net) 2-4.45-1.86-4.45-3.05-0.63 3.93-4.88 Calendar Year Performance (%) Return Currency 2013 2014 2015 2016 2017 AC -8.67 11.80 2.59 8.28 8.23 AC (Net) 2-11.41 8.44-0.49 5.03 4.98 ACSGD SGD - - - 9.34 0.12 ACSGD (Net) 2 SGD - - - 6.06-2.89 AD - 11.76 2.60 8.24 8.23 AD (Net) 2-8.40-0.48 4.99 4.98 AM2 AM2 (Net) 2 AM3OSGD SGD AM3OSGD (Net) 2 SGD ID - 12.49 3.26 8.94 8.92 ID (Net) 2-9.12 0.16 5.67 5.66 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 AC - - - - ACSGD SGD - - - - AD Annually 07 Jul 2017 0.448033 4.53% AM2 Monthly 28 Mar 2018 0.054369 6.88% AM3OSGD SGD Monthly 28 Mar 2018 0.048957 6.20% ID Annually 07 Jul 2017 0.562001 5.18% 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.
HSBC Global Investment s - India Fixed Income Supplement Information Sheet Share Class Inception Date ISIN AC ACSGD AD AM2 AM3OSGD ID Base Currency Min. Initial Investment NAV per Share Annual Management Fee Distribution Type 20 Aug 2012 LU0780247804 1,000 12.65 1.09% Accumulating 03 Dec 2015 LU1317426903 SGD SGD 1,000 10.70 1.11% Accumulating 25 Jan 2013 LU0780247986 1,000 9.83 1.10% Distributing 29 Jun 2017 LU1560771195 1,000 9.48 1.10% Distributing 30 Jun 2017 LU1560771351 SGD SGD 1,000 9.47 1.10% Distributing 28 Jun 2013 LU0780248364 1,000,000 10.84 0.55% 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 March 2018
HSBC Global Investment s - India Fixed Income SG Share Class ACSGD ACSGD 31/03/2018 Objective and Strategy The aims to provide long-term total return (meaning capital growth and income) by investing in a portfolio of Indian bonds. In normal market conditions, at least 90% of the s assets are invested in investment-grade bonds (rated as such by a credit ratings agency), non-investment grade or unrated bonds (which carry more risk) and other similar securities. The can invest in bonds issued the Indian government, its government agencies, and Indian companies. The s assets can be denominated in Indian rupee and the US dollar. The can also invest in other instruments, e.g. structured notes referencing underlying exposure to Indian Rupee bonds and cash. Investment in Indian domestic fixed income securities may from time to time be restricted by Indian domestic regulation and hence the may have substantial exposure to non-indian Rupee denominated investments outside of India. The can also invest up to 10% of its assets in contingent convertible securities. These are bonds that convert to equities (carrying increased risk) if the issuer runs into difficulty. However, this exposure is not expected to exceed 5%. See the Prospectus for a description of derivative usage. Since Inception Performance (%) 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 / SRS (Supplementary Retirement Scheme) Accumulating Daily 17:00 Luxembourg SGD 1,000 Performance (%) YTD 1M 3M 1Y 3Y¹ Since Inception¹ Annual Management Fee 1.11% Max. Initial Charge Base Currency 3.00% SGD ACSGD -3.59 0.14-3.59-4.57 - - 2.96 Domicile Luxembourg ACSGD (Net) 2-6.48-2.86-6.48-7.43 - - 1.62 ISIN Inception Date LU1317426903 03 Dec 2015 Calendar Year NAV per Share SGD 10.70 2013 2014 2015 2016 2017 Performance (%) Size 911,628,949 ACSGD - - - 9.34 0.12 Bloomberg Ticker HSACSGD LX ACSGD (Net) 2 - - - 6.06-2.89 Manager Gordon Rodrigues 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 March 2018 is over one year. Risk Disclosure 2 Net of relevant prevailing sales charge General Investment Risk: The value of investments and any income from them can go down as well as up and you may not get back the amount originally invested. Contingent Convertible Security (CoCo) Risk: Under certain circumstances CoCos can be converted into shares of the issuing company, potentially at a discounted price, or the principal amount invested may be lost. Derivative Risk: A small movement in the value of the underlying asset can cause a large movement in the value of the derivative. Investing in derivatives involves leverage. High degrees of leverage can magnify the impact of asset price or rate movements. Emerging Market Risk: Emerging markets are subject to greater illiquidity and volatility than developed markets. Exchange Rate Risk: Changes in currency exchange rates will cause the value of investments to fluctuate. Fixed Income Risk: As interest rates rise debt securities will fall in value. All credit instruments have potential for default. High Yield risk: Higher yielding securities characteristically bear greater credit risk than investment grade securities. Interest Rate Risk: Relative yield and the capital values may be reduced by rising interest rates. 5Y¹
HSBC Global Investment s - India Fixed Income Share Class ACSGD 3-Year Risk Measures ACSGD 5-Year Risk Measures ACSGD Volatility - Volatility - Sharpe Ratio - Sharpe Ratio - Tracking Error - Tracking Error - Information Ratio - Information Ratio - Characteristics Characteristics Current Yield (Gross) 7.33 Number of Holdings ex Cash 78 Modified Duration to Worst 5.05 Average Coupon 7.34 Maturity Average 7.03 Option Adjusted Duration Number of Issuers 29 (OAD) 3 5.09 Yield to Worst (Gross) 7.79 Yield to Maturity (Gross) 7.80 Credit Quality Rating Allocation (%) Sovereign 37.47 Quasi-sovereign 22.79 Financial 17.59 BBB 43.92 Oil & Gas 7.00 BB 1.60 Bank 6.44 NR 52.73 Utility 6.10 Cash 1.75 US dollar 5.66 Sorted from highest to lowest rating. Cash is not included in any rating. United States dollar - Industrial 0.87 Maturity Breakdown (OAD) 0-2 years 0.04 2-5 years 1.11 5-10 years 2.82 10+ years 1.12 Cash 0.00 Total 5.09 Sorted from shortest to longest per the length of maturity. Sector Allocation (%) Cash 1.75 Sorted from largest to smallest per market values of weight. 3 OAD, Option Adjusted Duration, excludes interest rate futures, bond futures and excess return from interest rate swaps. Source: HSBC Global Asset Management, data as at 31 March 2018
HSBC Global Investment s - India Fixed Income Share Class ACSGD Monthly Performance Commentary Review The India government bond market rebounded in March from its previous weakness and ended the month among the best performing markets in the Asian region. India government bond yields went down across the curve by around 25 bps on average, with a surprise cut in government security issuance in H1 FY 2018-19. Meanwhile, largely led by a fall in vegetable prices, headline CPI inflation also came in lower than expected in February and slowed to 4.4% yoy from 5.1% in January. The Indian rupee (INR) ended flat against the US dollar, as outflows from the domestic debt market in the month were largely offset by inflows into the equity market. On 26 March, the Reserve Bank of India (RBI) announced the much awaited government securities issuance calendar for H1 FY 2018-19. Gross issuance in the period will be 23% less than that in H1 FY 2017-18. This will constitute only 48% of the full-year budgeted borrowing while usually the government frontload 60-65% of the borrowing to the first half of the year. Meanwhile, net government securities supply will be about 14% lower than that in H1 FY 2017-18. In addition, the government plans to launch inflation indexed government bonds linked to CPI and to start issuing bonds in 1-5Y maturity buckets. There is now a relatively smaller portion of conventional bond supply in the medium and long-dated maturity buckets. The announcement sent the benchmark 10 year government bond yield down by around 30 bps. Portfolio strategy The fund rebounded in March in terms, as the fund s exposure to India government bonds and domestic quasi sovereign issues added value with the broad decline in India government bond yields. On the other hand, the fund s positions in -denominated bonds weighed on the fund s performance given the widening in credit spread of India dollar credit amid broad risk off sentiment in March. In the month, amid inflows into the fund, we continued to add selectively to state government loan (SDL) securities for their attractive spread against central government bonds. Meanwhile, we also selectively added to corporate bonds to maintain carry in a stable interest rate environment. However, we still favour domestic government bonds given balanced growth-inflation dynamics and expectation of the RBI to remain on hold in the near term. As of now, we still remain cautious of -denominated corporate bonds with expectations of continued US monetary policy normalisation. However, with US Treasury yields having reached relatively attractive levels and some spreads having widened out as well, going forward we may tactically add to bonds in this space as synthetic INR yields have started to look attractive for some of these bonds on a tax adjusted basis. Outlook We believe this is a good entry point into the Indian bond market, given that the market has been weak over the last 6-8 months, and yields have picked up significantly. We are seeing very high real interest rates given that inflation has come down in February to 4.44% which is well below RBI s upper bound inflation target of 6%. Following the rebound in March, we note that India government securities still offer one of the highest real yields within Emerging Market high yielders. A further downward surprise in inflation following two consecutive months of downward surprises could lead to a reassessment of inflation risks and should support a compression of real yields at the long-end of the curve. In addition, the RBI announced in early April that it will allow banks to spread out mark-to-market losses on their investment portfolio and will increase the ceiling on foreign investment in government securities gradually to 6% of outstanding securities over the next two years from 5% currently should also be generally positive for the strategy. These, together with lower government borrowing in H1 2018-19 should help improve demand/supply dynamics in the near term, stabilise investors sentiments and offset the negative effect from reduced investment appetite from public sector banks. The immediate threat of an interest rate hike which people had been expecting is diminished for the time being. At the same time there is no significant threat to the Indian economy, though some investors are becoming nervous ahead of the general elections in 2019. However, we believe it would be too late to buy into this market after the election because if Mr. Modi is re-elected as Prime Minister, bond yields could immediately fall significantly. Therefore we think it is a good time to invest in Indian bonds now, and we don t expect the weakness of last year to continue. In addition, investors are protected quite a lot from any other kind of volatility -i.e. volatility in capital or currency by the very high yields available in this market. Even in an environment of rising yields or a slightly weaker Rupee, investors can still make positive returns from the strategy due to the high carry. In addition, Indian bonds also are a good diversifier in a global bond portfolio.
HSBC Global Investment s - India Fixed Income Share Class ACSGD Important Information This document is prepared for general information purposes only and does not have any regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive it. Any views and opinions expressed are subject to change without notice. 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. 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. Investors may wish to seek advice from a financial adviser before purchasing units in the fund. Investment involves risk. Past performance of any fund or the manager, and any economic and market trends or forecasts are not necessarily indicative of the future or likely performance of the fund or the manager. Unit values and income therefrom may fall as well as rise and the 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 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. Yield to worst, the lowest potential yield that can be received on a bond without the issuer actually defaulting.
HSBC Global Investment s - India Fixed Income Supplement Information Sheet Performance (%) Return Currency YTD 1M 3M 6M 1Y 3Y 1 5Y 1 Since Inception 1 AC -1.65 1.12-1.65-0.39 1.79 4.33 3.31 4.28 AC (Net) 2-4.60-1.91-4.60-3.37-1.26 3.27 2.68 3.71 ACSGD SGD -3.59 0.14-3.59-3.90-4.57 - - 2.96 ACSGD (Net) 2 SGD -6.48-2.86-6.48-6.78-7.43 - - 1.62 AD -1.65 1.12-1.65-0.39 1.78 4.31 3.30 2.89 AD (Net) 2-4.60-1.91-4.60-3.37-1.27 3.26 2.67 2.29 AM2-1.64 1.12-1.64-0.38 - - - - AM2 (Net) 2-4.59-1.92-4.59-3.36 - - - - AM3OSGD SGD -1.90 1.06-1.90-0.78 - - - - AM3OSGD (Net) 2 SGD -4.84-1.97-4.84-3.76 - - - - ID -1.49 1.18-1.49-0.06 2.44 4.99-5.56 ID (Net) 2-4.45-1.86-4.45-3.05-0.63 3.93-4.88 Calendar Year Performance (%) Return Currency 2013 2014 2015 2016 2017 AC -8.67 11.80 2.59 8.28 8.23 AC (Net) 2-11.41 8.44-0.49 5.03 4.98 ACSGD SGD - - - 9.34 0.12 ACSGD (Net) 2 SGD - - - 6.06-2.89 AD - 11.76 2.60 8.24 8.23 AD (Net) 2-8.40-0.48 4.99 4.98 AM2 AM2 (Net) 2 AM3OSGD SGD AM3OSGD (Net) 2 SGD ID - 12.49 3.26 8.94 8.92 ID (Net) 2-9.12 0.16 5.67 5.66 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 ACSGD SGD - - - - AC - - - - AD Annually 07 Jul 2017 0.448033 4.53% AM2 Monthly 28 Mar 2018 0.054369 6.88% AM3OSGD SGD Monthly 28 Mar 2018 0.048957 6.20% ID Annually 07 Jul 2017 0.562001 5.18% 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.
HSBC Global Investment s - India Fixed Income Supplement Information Sheet Share Class Inception Date ISIN ACSGD AC AD AM2 AM3OSGD ID Base Currency Min. Initial Investment NAV per Share Annual Management Fee Distribution Type 03 Dec 2015 LU1317426903 SGD SGD 1,000 10.70 1.11% Accumulating 20 Aug 2012 LU0780247804 1,000 12.65 1.09% Accumulating 25 Jan 2013 LU0780247986 1,000 9.83 1.10% Distributing 29 Jun 2017 LU1560771195 1,000 9.48 1.10% Distributing 30 Jun 2017 LU1560771351 SGD SGD 1,000 9.47 1.10% Distributing 28 Jun 2013 LU0780248364 1,000,000 10.84 0.55% 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 March 2018
HSBC Global Investment s - India Fixed Income SG Share Class AD AD 31/03/2018 Objective and Strategy The aims to provide long-term total return (meaning capital growth and income) by investing in a portfolio of Indian bonds. In normal market conditions, at least 90% of the s assets are invested in investment-grade bonds (rated as such by a credit ratings agency), non-investment grade or unrated bonds (which carry more risk) and other similar securities. The can invest in bonds issued the Indian government, its government agencies, and Indian companies. The s assets can be denominated in Indian rupee and the US dollar. The can also invest in other instruments, e.g. structured notes referencing underlying exposure to Indian Rupee bonds and cash. Investment in Indian domestic fixed income securities may from time to time be restricted by Indian domestic regulation and hence the may have substantial exposure to non-indian Rupee denominated investments outside of India. The can also invest up to 10% of its assets in contingent convertible securities. These are bonds that convert to equities (carrying increased risk) if the issuer runs into difficulty. However, this exposure is not expected to exceed 5%. See the Prospectus for a description of derivative usage. Since Inception Performance (%) Share Class Details UCITS V Compliant Yes 120 110 100 90 80 70 Subscription Mode Distribution Type Distribution Frequency Dealing Frequency Valuation Time Min. Initial Investment Cash Distributing Annually Daily 17:00 Luxembourg 1,000 Annual Management Fee 1.10% Performance (%) YTD 1M 3M 1Y 3Y¹ 5Y¹ Since Inception¹ Max. Initial Charge Base Currency AD -1.65 1.12-1.65 1.78 4.31 3.30 2.89 Domicile Luxembourg AD (Net) 2-4.60-1.91-4.60-1.27 3.26 2.67 2.29 ISIN Inception Date LU0780247986 25 Jan 2013 Calendar Year NAV per Share 9.83 2013 2014 2015 2016 2017 Performance (%) Size 911,628,949 AD - 11.76 2.60 8.24 8.23 Bloomberg Ticker HSIFAUI LX AD (Net) 2-8.40-0.48 4.99 4.98 Manager Gordon Rodrigues 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 March 2018 is over one year. Risk Disclosure 2 Net of relevant prevailing sales charge General Investment Risk: The value of investments and any income from them can go down as well as up and you may not get back the amount originally invested. Contingent Convertible Security (CoCo) Risk: Under certain circumstances CoCos can be converted into shares of the issuing company, potentially at a discounted price, or the principal amount invested may be lost. Derivative Risk: A small movement in the value of the underlying asset can cause a large movement in the value of the derivative. Investing in derivatives involves leverage. High degrees of leverage can magnify the impact of asset price or rate movements. Emerging Market Risk: Emerging markets are subject to greater illiquidity and volatility than developed markets. Exchange Rate Risk: Changes in currency exchange rates will cause the value of investments to fluctuate. Fixed Income Risk: As interest rates rise debt securities will fall in value. All credit instruments have potential for default. High Yield risk: Higher yielding securities characteristically bear greater credit risk than investment grade securities. Interest Rate Risk: Relative yield and the capital values may be reduced by rising interest rates. 3.00%
HSBC Global Investment s - India Fixed Income Share Class AD 3-Year Risk Measures AD 5-Year Risk Measures AD Volatility 6.2% Volatility 9.8% Sharpe Ratio 0.55 Sharpe Ratio 0.27 Tracking Error - Tracking Error - Information Ratio - Information Ratio - Characteristics Characteristics Current Yield (Gross) 7.33 Number of Holdings ex Cash 78 Modified Duration to Worst 5.05 Average Coupon 7.34 Maturity Average 7.03 Option Adjusted Duration Number of Issuers 29 (OAD) 3 5.09 Yield to Worst (Gross) 7.79 Yield to Maturity (Gross) 7.80 Credit Quality Rating Allocation (%) Sovereign 37.47 Quasi-sovereign 22.79 Financial 17.59 BBB 43.92 Oil & Gas 7.00 BB 1.60 Bank 6.44 NR 52.73 Utility 6.10 Cash 1.75 US dollar 5.66 Sorted from highest to lowest rating. Cash is not included in any rating. United States dollar - Industrial 0.87 Maturity Breakdown (OAD) 0-2 years 0.04 2-5 years 1.11 5-10 years 2.82 10+ years 1.12 Cash 0.00 Total 5.09 Sorted from shortest to longest per the length of maturity. Sector Allocation (%) Cash 1.75 Sorted from largest to smallest per market values of weight. 3 OAD, Option Adjusted Duration, excludes interest rate futures, bond futures and excess return from interest rate swaps. Source: HSBC Global Asset Management, data as at 31 March 2018
HSBC Global Investment s - India Fixed Income Share Class AD Monthly Performance Commentary Review The India government bond market rebounded in March from its previous weakness and ended the month among the best performing markets in the Asian region. India government bond yields went down across the curve by around 25 bps on average, with a surprise cut in government security issuance in H1 FY 2018-19. Meanwhile, largely led by a fall in vegetable prices, headline CPI inflation also came in lower than expected in February and slowed to 4.4% yoy from 5.1% in January. The Indian rupee (INR) ended flat against the US dollar, as outflows from the domestic debt market in the month were largely offset by inflows into the equity market. On 26 March, the Reserve Bank of India (RBI) announced the much awaited government securities issuance calendar for H1 FY 2018-19. Gross issuance in the period will be 23% less than that in H1 FY 2017-18. This will constitute only 48% of the full-year budgeted borrowing while usually the government frontload 60-65% of the borrowing to the first half of the year. Meanwhile, net government securities supply will be about 14% lower than that in H1 FY 2017-18. In addition, the government plans to launch inflation indexed government bonds linked to CPI and to start issuing bonds in 1-5Y maturity buckets. There is now a relatively smaller portion of conventional bond supply in the medium and long-dated maturity buckets. The announcement sent the benchmark 10 year government bond yield down by around 30 bps. Portfolio strategy The fund rebounded in March in terms, as the fund s exposure to India government bonds and domestic quasi sovereign issues added value with the broad decline in India government bond yields. On the other hand, the fund s positions in -denominated bonds weighed on the fund s performance given the widening in credit spread of India dollar credit amid broad risk off sentiment in March. In the month, amid inflows into the fund, we continued to add selectively to state government loan (SDL) securities for their attractive spread against central government bonds. Meanwhile, we also selectively added to corporate bonds to maintain carry in a stable interest rate environment. However, we still favour domestic government bonds given balanced growth-inflation dynamics and expectation of the RBI to remain on hold in the near term. As of now, we still remain cautious of -denominated corporate bonds with expectations of continued US monetary policy normalisation. However, with US Treasury yields having reached relatively attractive levels and some spreads having widened out as well, going forward we may tactically add to bonds in this space as synthetic INR yields have started to look attractive for some of these bonds on a tax adjusted basis. Outlook We believe this is a good entry point into the Indian bond market, given that the market has been weak over the last 6-8 months, and yields have picked up significantly. We are seeing very high real interest rates given that inflation has come down in February to 4.44% which is well below RBI s upper bound inflation target of 6%. Following the rebound in March, we note that India government securities still offer one of the highest real yields within Emerging Market high yielders. A further downward surprise in inflation following two consecutive months of downward surprises could lead to a reassessment of inflation risks and should support a compression of real yields at the long-end of the curve. In addition, the RBI announced in early April that it will allow banks to spread out mark-to-market losses on their investment portfolio and will increase the ceiling on foreign investment in government securities gradually to 6% of outstanding securities over the next two years from 5% currently should also be generally positive for the strategy. These, together with lower government borrowing in H1 2018-19 should help improve demand/supply dynamics in the near term, stabilise investors sentiments and offset the negative effect from reduced investment appetite from public sector banks. The immediate threat of an interest rate hike which people had been expecting is diminished for the time being. At the same time there is no significant threat to the Indian economy, though some investors are becoming nervous ahead of the general elections in 2019. However, we believe it would be too late to buy into this market after the election because if Mr. Modi is re-elected as Prime Minister, bond yields could immediately fall significantly. Therefore we think it is a good time to invest in Indian bonds now, and we don t expect the weakness of last year to continue. In addition, investors are protected quite a lot from any other kind of volatility -i.e. volatility in capital or currency by the very high yields available in this market. Even in an environment of rising yields or a slightly weaker Rupee, investors can still make positive returns from the strategy due to the high carry. In addition, Indian bonds also are a good diversifier in a global bond portfolio.
HSBC Global Investment s - India Fixed Income Share Class AD Important Information This document is prepared for general information purposes only and does not have any regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive it. Any views and opinions expressed are subject to change without notice. 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. 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. Investors may wish to seek advice from a financial adviser before purchasing units in the fund. Investment involves risk. Past performance of any fund or the manager, and any economic and market trends or forecasts are not necessarily indicative of the future or likely performance of the fund or the manager. Unit values and income therefrom may fall as well as rise and the 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 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. Yield to worst, the lowest potential yield that can be received on a bond without the issuer actually defaulting.