Global High Yield Bond
The HSBC GIF Global High Yield Bond Fund focuses on high yield opportunities in the US and Europe. We also manage a US Short Duration High Yield Bond strategy, which aims to provide attractive returns with lower duration and volatility.
Our approach
This actively managed fund aims to maximise total return through specialised credit selection and top-down strategic positioning. With a portfolio of 200+ non-investment grade bonds, the fund offers exposure to a broad range of sectors in global high yield credit markets. The portfolio seeks to invest in a globally diversified portfolio of high yield securities in the US and Europe with tactical off benchmark allocations to Emerging markets and Securitised Credit. The fund invests predominantly in BB and B rated corporate bonds with the flexibility to invest in investment grade or CCC rated bonds opportunistically (based on Bloomberg Barclays rating methodology).
1. Attractive risk/reward profile
HSBC’s relative value focus specialises in uncovering value from misunderstood US and international corporate debt. The fund targets higher risk-adjusted returns than the benchmark through careful portfolio construction, risk budgeting and risk measurement.
2. Global diversification
The lead fund manager allocates assets across multiple regions and asset classes (US, Euro, Emerging Markets, Securitised Credit). This structure captures different yield, quality, duration and volatility characteristics of the global opportunity set.
3. Research-driven, risk-aware
HSBC’s global credit platform leverages our geographic reach for direct access to experienced global teams of fund managers and credit research analysts. Identifying, pricing and combining risks is at the core of our investment approach.
HSBC’s strengths
With over 170 professional investors – including 40+ credit analysts globally we are able to connect investors with fixed income opportunities, in most geographies and across all market segments.
Why consider choosing this fund?
- A clear focus on income generation over the long term
- A broad investment universe: Opportunities globally with broad exposures to US and Europe with tactical allocations to emerging markets and securitised credit
- Cost-effective: a convenient and cost-effective way to invest in higher yielding securities
- Daily valuations and liquidity
- Income can be distributed monthly: the Fund has monthly distribution share classes
Key risks
It is important to remember that the value of investments and any income from them can go down as well as up and is not guaranteed.
- Credit risk: issuers of debt securities may fail to meet their regular interest and/or capital repayment obligations. All credit instruments therefore have potential for default. Higher yielding securities are more likely to default
- Exchange rate risk: investing in assets denominated in a currency other than that of the investor’s own currency perspective exposes the value of the investment to exchange rate fluctuations
- Interest rate risk: as interest rates rise debt securities will fall in value. The value of debt securities is inversely proportional to interest rate movements
- Emerging market risk: emerging economies typically exhibit higher levels of investment risk. Markets are not always well regulated or efficient and investments can be affected by reduced liquidity
- Asset backed securities (ABS) risk: ABS are typically constructed from pools of assets (e.g. mortgages) that individually have an option for early settlement or extension, and have potential for default. Cash flow terms of the ABS may change and significantly impact both the value and liquidity of the contract
- Derivatives (leverage) the use of derivatives instruments can involve risks different from, and in certain cases greater than, the risks associated with more traditional assets. The value of derivative contracts is dependent upon the performance of underlying assets. A small movement in the value of the underlying assets can cause a large movement in the exposure and value of derivatives. Investment leverage (gearing) can result from using derivatives for investment purposes, where the gross market risk of the portfolio is greater than the value of its net assets. When this happens the portfolio can go up/down by more than expected relative to the performance of the markets/assets the fund is invested in. Unlike exchange traded derivatives, over-the-counter (OTC) derivatives have credit and legal risk associated with the counterparty or the institution that facilitates the trade
- Operational risk: the main risks are related to systems and process failures. Investment processes are overseen by independent risk functions which are subject to independent audit and supervised by regulators
For more detailed information on the risks associated with this fund, investors should refer to the prospectus of the fund.
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