Press Room | HSBC
HSBC Launches Chinese Renminbi Fixed Income Fund in the U.S.
12 June 2012
New York, NY - HSBC Global Asset Management (USA) Inc. today announced it has launched a Chinese Renminbi (RMB) fixed income mutual fund for US investors. The HSBC RMB Fixed Income Fund aims to provide US investors the opportunity to access China's rapidly growing offshore bond market as well as to participate in any potential appreciation in China's currency. The objective of the Fund is to maximize total return, comprised of both capital appreciation and income, by investing principally in fixed income securities that provide exposure to the RMB.
The Fund is managed by HSBC Global Asset Management's Hong-Kong based Asian Fixed Income team, which manages a total of US $29.921 billion in Asian fixed income investments. The team is headed by Cecilia Chan who has managed Asian fixed income assets at HSBC for 18 years.
Chan said: "The investment case for the offshore RMB bond market is compelling, given competitive yields and the long-term potential for the RMB currency to appreciate. We think that the internationalization of the RMB will continue to be an important theme for many years to come."
The offshore RMB bond market, often referred to as the "Dim Sum bond" market, has grown very rapidly since the middle of 2010 when legislation was passed in China and Hong Kong, allowing a wide range of institutions to issue bonds denominated in China's currency. Today, the offshore RMB bond market is already valued at RMB273 billion (USD42.9 billion).2
Christian Deseglise, Head of Sales in the Americas for HSBC Global Asset Management, said: "As China is a global economic powerhouse, we expect its bond market to become one of the most important in the world. In addition, the Renminbi has the potential to become one of the world's major currencies. We expect allocations to RMB fixed income to increase substantially in the future."
He continued: "The unique nature of this market is enticing to investors wishing to geographically diversify their risk while also gaining exposure to the world's second largest economy and its currency. The HSBC RMB Fixed Income Fund brings HSBC Global Asset Management's experience and expertise in managing Asian fixed income to US investors in a straightforward way."
HSBC Global Asset Management is at the forefront of emerging markets investing, with more than US$140 billion1 in emerging markets assets under management.
The HSBC RMB Fixed Income Fund trades in A shares (HRMBX), I shares (HRMRX) and S shares (HRMSX). For more information, please go to www.emfunds.us.hsbc.com.
Note to editors
HSBC Global Asset Management
HSBC Global Asset Management manages assets totaling US$429.4 billion, and is a leader in emerging markets strategies, with more than US$140 billion under management. Through its network of offices in approximately 30 countries, HSBC Global Asset Management invests worldwide for private clients, intermediaries, corporations and institutions, both in segregated accounts and pooled funds. (All figures as at 31 March 2012). For more information, see www.emfunds.us.hsbc.com
HSBC Global Asset Management (USA) Inc. serves as investment adviser to the HSBC Funds and receives fees for such services. All sub-advisers receive fees for their services. Shares of the Funds are not deposits or obligations of, or guaranteed or endorsed by, the advisers or any of their affiliates. Shares of the Funds are not federally insured by the U.S. Government, the Federal Deposit Insurance Corporation (FDIC), the Federal Reserve Board or any other agency or state. Shares of the Funds are subject to investment risk including possible loss of principal invested. Foreside Distribution Services, L.P., member FINRA, the distributor, is not affiliated with the adviser.
Any forecast, projection or target contained in this presentation is for information purposes only and is not guaranteed in any way. HSBC accepts no liability for any failure to meet such forecasts, projections or targets. The views and opinions quoted above are those of the individuals, and are subject to change at any time.
HSBC Holdings plc
HSBC Holdings plc, the parent company of the HSBC Group, is headquartered in London. The Group serves customers worldwide from around 7,200 offices in over 80 countries and territories in Europe, the Asia-Pacific region, North and Latin America, the Middle East and Africa. With assets of US$2,556bn at 31 December 2011, HSBC is one of the world's largest banking and financial services organizations.
There are risks associated with investing in a fund that invests in securities of foreign countries, such as erratic market conditions, economic and political instabilities and fluctuations in currency exchanges. Bond funds will tend to experience smaller fluctuations in value than stock funds. However, investors in any bond fund should anticipate fluctuations in price, especially for longer term issues and in environments of rising interest rates. Investments in the fund are subject to possible loss due to the financial failure of underlying securities and their inability to meet their client obligations. Prices of securities in emerging markets can fluctuate more significantly than the prices of companies in more developed countries. Securities of emerging market issuers generally have more risk than securities issued by issuers in more developed markets. The less developed the country, the greater affect the risks may have in an investment, and as a result, an investment may exhibit a higher degree of volatility than either the general domestic securities market or the securities markets of developed foreign countries. Global economic volatility may impact the RMB fixed income market. However, RMB Fixed Income is not highly correlated to developed markets fixed income and as such can provide added diversification benefits.
Investing in RMB-denominated debt instruments that may be issued by issuers located in Hong Kong and China or multi-national issuers with subsidiaries in Hong Kong or China, may involve special risks. In this regard, the Fund may be exposed to risks associated with mainland China, even though Hong Kong has a separate political and legal system. Risk relating to Hong Kong and mainland China include currency risk, political and economic risk. It is difficult for investors located outside of China to directly access debt instruments in mainland China because of investment and trading restrictions. For this reason, the Fund has to obtain exposure to RMB and RMB-denominated debt instruments by making investments outside of China, and generally in Hong Kong. These limitations and restrictions on access to the CNY market may impact the availability, liquidity, and pricing of investments designed to provide investors with exposure to Chinese markets and RMB.
RMB-denominated debt instrument issuance in Hong Kong is subject to Hong Kong laws and regulations. The Chinese government currently views Hong Kong as one of the key offshore RMB-denominated debt instrument centers and has established a cooperative relationship with Hong Kong's local government to develop the RMB-denominated debt instrument market. There can be no assurance that the Chinese government will continue to encourage issuance of RMB-denominated debt instruments outside of mainland China and any change in the Chinese government's policy or the regulatory regime governing the issuance of RMB-denominated debt instruments in Hong Kong may adversely affect the Fund. Because the Fund concentrates its investments in China, the Fund's performance is expected to be closely tied to social, political, and economic conditions within China and to be more volatile than the performance of more geographically diversified funds.
The Funds may use derivatives in connection with its investment strategies to hedge and manage risk and to increase its return. Derivatives may be riskier than other types of investments because they may be more sensitive to changes in economic or market conditions than other types of investments and could result in losses that significantly exceed each Fund's original investment.
NOT FDIC INSURED/NO BANK GUARANTEE/MAY LOSE VALUE
Investors should consider the investment objectives, risks, charges and expenses of the investment company carefully before investing. The prospectus contains this and other important information about the investment company. For clients of HSBC Securities (USA) Inc., please call 1-888-525-5757 for more information. For other investors and prospective investors, please call the Funds directly at 1-800-782-8183 or visit our website at www.emfunds.us.hsbc.com. Investors should read the prospectus carefully before investing or sending money.
- Neil Brazil
1 Data as of 31 March 2012.
2 Data as of 31 March 2012. US dollar figure is calculated at the conversion rate of 1 CNY = 0.157107 USD as of 4 June 2012.
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