HSBC Asset Management has launched the first authorised fund of hedge funds in Hong Kong, the HSBC Global Strategy Hedge Fund. The fund will primarily invest in equity hedge funds with a long/short strategy. The number of funds in the portfolio will vary, but will be around 40. Up to 30% of the fund of hedge fund could be invested in strategies other than equity long/short. These strategies could include global macro or arbitrage.
HSBC Asset Management is the representative of the fund in Hong Kong and is responsible for marketing and distribution. HSBC Republic, HSBC's private banking arm, is the fund manager and advisor. The fund will be sold through all HSBC and Hang Seng bank branches in Hong Kong.
Bonnie Lam, director at HSBC Asset Management says the fund has a niche target market. "The Global Strategy Fund is suitable for experienced investors who wish to diversify their portfolio and have a medium to long investment time horizon," she says.
HSBC said that there is no target fund size due to the fact that this is a new product for Hong Kong retail and so the market's reaction is difficult to gauge. However, the fund is open-ended and the bank doe not anticipate any capacity problems.
The fund's benchmark is twice the US dollar 3-month LIBOR rate, with a subscription fee of up to 5.25% and a management fee of 1.65% pa. A performance fee of 10% of any increase in the NAV per unit will also be charged. The minimum investment is $10,000, in line with the SFC hedge fund regulations.