HSBC Global Asset Management today said it was launching a new renminbi fixed income fund, via it’s Luxembourg-based Global Investment Funds Sicav, to cater for the growing appetite in the UK and Europe for renminbi-denominated products.
The fund, which will be registered for sale across Europe, is one of the first Luxembourg funds to be denominated in the Chinese currency.
It is being offered in both wholesale and institutional share classes, with minimum investment levels of $5,000 (£3,126, €3,567) and $1m (£625,250, €713,500) respectively.
The new fund is being managed by HSBC Global Asset Management’s Asian fixed income team, based in Hong Kong and headed by Cecilia Chan, who has managed Asian fixed income assets at HSBC for 17 years. At the end of June, Chan and her team were looking after Asian fixed income assets worth a total of $24bn, HSBC said.
According to Chan, the potential for the renminbi to appreciate significantly is at the root of what she said is a “powerful” case for investing in renminbi-denominated products.
“The Chinese authorities have allowed a managed appreciation of the currency to cool the economy, and to ease international relations with trading partners who objected to the advantageous terms of trade that a weak Renminbi has meant for China,” Chan added, in a statement accompanying the announcement of the new fund.
“This process still has further to go, and the Renminbi has the potential to be one of the world’s major reserve currencies in the future.
“As such, we believe the emergence of the offshore Renminbi fixed income market will provide investors with an exciting new investment opportunity.”
Focus on offshore RMB instruments
The new HSBC GIF RMB Fixed Income fund will focus on offshore RMB-denominated instruments, including RMB denominated bonds and RMB deposits, HSBC said.
The fund is structured so that asset allocation will vary over time as opportunities develop in the market and as the regulatory environment evolves.
“The RMB market is characterised by shorter duration instruments, so the average duration of the fund is likely to be in the one- to three-year range,” HSBC said.
“There will be diversified credit exposure, and the investment approach will combine a rigorous top down approach with bottom up fundamental analysis.”
Many RMB issues are non- rated, so all issues will be subject to “a rigorous screening process by the investment team”, it added.
The new product is not HSBC GAM’s first in the RMB space. In February, it launched its so-called HGIT RMB Bond fund, which is domiciled in the Cayman Islands and targets mostly Asian clients.
Earlier this month,Allianz Global Investors said it had received approval from the Luxembourg regulator (CSSF) for a renminbi currency fund managed Hong Kong-based Helen Lam, which it launched on 18 Oct.
