HSBC launches retail hedge fund in Hong Kong

HSBC Asset Management today launched its first fund of hedge funds product to retail investors in Hong Kong.

Called HSBC Global Strategy Hedge Fund, the fund will consist of 30 to 40 underlying hedge funds with a bias towards equity strategies, although up to 30% of the fund will be invested in hedge funds using global macro and arbitrage strategies.

"In light of the recent market downturn and volatility, many investors are looking for alternative investment vehicles," said Bonnie Lam, director at HSBC Asset Management in Hong Kong. "Hong Kong investors are becoming more sophisticated and experienced... they are looking for more investment choices."

But she added that there is still a perception among retail investors that hedge funds are associated with high risks and high volatility. The underlying hedge funds were chosen from a database of 700 hedge funds and judged by the risk/return characteristics of each fund.

HSBC Asset Management is the representative of the fund in Hong Kong and is responsible for its marketing and distribution, while the fund itself will be managed by HSBC Republic, the international private banking division of HSBC.

By December last year, HSBC Republic had more than $10 billion of client assets invested in over 400 hedge funds.

Lam added that the bank may launch a capital protected hedge fund product if there is demand in the market.

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