The Luxembourg-domiciled Ucits fund will be managed by Mary Bowers, who is part of HSBC’s New York-based fixed income team. The portfolio will typically hold 70-100 high yield bonds with final maturity or expected call dates within three years, selected from a universe of US and European corporates rated at an average of BB or BBB.
At least 90% of the bonds will be denominated in dollars or hedged into dollars, but the fund will have around 10% exposure to other currencies. The fund will be benchmarked against the Bank of America Merrill Lynch 1-3 Year BB-B US and Euro Non-Financial High Yield 2% Constrained (dollar hedged) Index.
The minimum investment into the new fund will be $5,000 for the wholesale share class, which carries an ongoing charge (including administration) of 1.15%.
Bowers said: “Despite the current low growth environment, US and Eurozone high yield corporate fundamentals generally remain healthy and high yield defaults are relatively stable. While the uncertainly over Quantitative Easing tapering may keep markets volatile, we believe that credit spreads can fall back, especially in BBB and high yield areas of the market. Current volatility could provide an opportunity to reallocate risk by rotating between segments and regions and by increasing exposure selectively.”
Bowers was recruited by HSBC in early October. She had previously worked for Artio Global Investors, which was bought by Aberdeen Asset Management earlier this year. She also runs HSBC’s $1.1bn GIF Global High Yield Bond Fund. She was part of a team managing $4bn in high yield assets at Artio and reports to Xavier Baraton, global chief investment officer, fixed income at the group.