Hang Seng Bank is looking to expand its range of funds to meet customers’ demand for more equity exposure, its head of investment products told AsianInvestor.
The Hong Kong-based retail bank plans to offer multiple non-hedged currency classes on these global equity products as investors look to maximise their returns.
It is also looking to add thematic products onto its open-architecture platform, such as funds focused on old-age sectors.
Rosita Lee, head of investment products and advisory business at the HSBC-owned bank, said retail investors have recently shifted to investing in shares given the recent surge in equity prices. The best regional performer has been China A shares, which have surged in value in Shanghai and Shenzhen this year.
Though funds with a dividend feature are still popular, Lee said, there was a desire to invest in global equity products with different currency classes, with low volatility, and with new investment themes.
“Income-generating funds, no matter investing in equities or fixed income, were popular in the past two years. Recently, customers are paying more attention to the currency of the same underlying funds to maximise their returns,” said Lee, who is looking to add the following non-hedged currency classes: euro, Australian dollar, and British pound.
“We want to provide more choices because some investors have a view on currency. Customers are still interested in European equities but they may not be positive on the euro and want a different currency class,” Lee cited as an example.
Lee added that Hang Seng also wanted to introduce new thematic funds that can still pay income. A popular theme right now is focused on ageing populations. Hang Seng has several funds already investing in healthcare and biotechnology, but Lee said the bank wanted to broaden this and find funds that invest in companies catering to the needs of the older generation.
Whilst popular in Europe, the ageing-themed funds are only just coming to Asia. French manager Amundi has said that it will launch a fund in Hong Kong which will invest in old-age care industries, as reported.
In addition to the ageing theme, Lee said Hang Seng will also planned to add Asia emerging market funds. She said investors might be interested in having more product choice in this sector. She has ruled out adding funds investing in a single Asian market, such as Indonesia or India, because it would be too risky and the bank preferred to focus on regional investment for more diversification.
Lee believed its customers might also look into global low-volatility equity funds. “We are looking for this type of product as investors basically use this as their core holding in a portfolio,” she said.
The bank has about 400 open-ended funds with 22 managers on the fund platform, which are available to its traditional account holders (those who pay per transaction fees) and to customers on its digital platform iPower (those who pay a fixed fee per month for unlimited transactions).
Hang Seng Bank is one of Hong Kong’s largest fund distributors with a market capitalisation of HK$247 billion ($31.8 billion) as of December 31 last year. It is in the process of selling a stake China’s Industrial Bank for as much as $2.7 billion as it tries to boost capital.