This new all-weather fund provides sustainable income to investors in and out of market cycles

HSBC global asset management CEO Sten Ankarcrona reveals exclusive information on HSBC Managed Solutions – Asia Focused Income in Singapore.

The recently-launched HSBC Managed Solutions – Asia Focused Income in Singapore is first fund from the Managed Solution series that aims to provide retail investors in Singapore with stable income by capturing the growth potential of Asia through investing in different types of income-generating assets.

The new Managed Solutions series, available exclusively at HSBC, provides diversified investment opportunities and flexible asset allocation to meet the specific goals of retail investors based on their expected return and risk tolerance.

Singapore Business Review interviewed Mr Sten Ankarcrona, Chief Executive Officer of HSBC Global Asset Management (Singapore), to learn more about this new product.

SBR: What spurred the launch of this new fund?
We are currently in an environment of low interest rates, high inflation and market uncertainty where retail investors are looking for stable and regular income as can be seen in the strong inflows into fixed income products. With global recovery underway, there are potential income-generating opportunities from a wider range of other asset classes as well, specifically from fast-growing emerging markets.

Launched on 1 November 2012 in Singapore, the HSBC Managed Solutions – Asia Focused Income fund is developed to help retail investors generate potential sustainable income by capturing growth from a wider range of income-generating sources, with a focus on Asia. It also offers investors the peace of mind that this all-weather portfolio is being left to the experts to manage.

SBR: What's new about it for HSBC?
Singapore is the second market, after Hong Kong, to launch the HSBC Managed Solutions – Asia Focused Income. This is an all-weather solution which pursues stable income and moderate capital growth through its ability to flexibly manage, adjust and allocate a combination of income-generating assets, predominantly in the Asia ex-Japan region, to capture the best opportunities across different market conditions.

It is the first fund to be launched under the umbrella of the new Managed Solutions series, an investment platform which provides diversified investment opportunities and flexible asset allocation to meet the specific goals of retail investors based on their expected return and risk tolerance. It is available exclusively at HSBC to all retail investors.

Managed by the award-winning Asian Fixed Income and Asian Equity investment teams at HSBC Global Asset Management, this fund will invest a minimum of 70% in Asia ex-Japan across different asset classes, at any one point, to take advantage of the superior economic growth and low debt burden in Asia.

The range of asset classes includes dividend-paying stocks, bonds (investment grade, high yield, local currency, emerging markets and US treasuries), real estate investment trusts (REITs) and cash.

Since its inaugural launch in Hong Kong in May this year, the fund has grown close to US$1 billion and paid out an average annualised yield of 4.4% every month since July (as of 30 November 2012). This dividend yield is considered an attractive return for investors compared to the prevailing low interest rates.

In summary, these are the key distinguishing features of the HSBC Managed Solutions – Asia Focused Income:
•Multi-asset fund investing in a range of different income-generating assets
•Invests a minimum of 70% in Asia ex-Japan, to take advantage of the growth in Asia
•An all-weather portfolio – the fund manager will rebalance portfolio to capture best opportunities as market conditions change
•Takes away the need for investors to time the market themselves and can be positioned as a core holding
•Diversification to tap multiple income sources
•Delivers consistent monthly payouts
•First fund under the new HSBC Managed Solutions series
•Fund is available exclusively at HSBC only

Available exclusively at HSBC from 1 November 2012, the fund’s minimum investment amount is US$5,000 or S$5,000. Both USD and SGD-hedged share classes are available to retail investors, with the latter allowing one to benefit from direct capital appreciation of the underlying assets by erasing the effects of foreign exchange volatility.

SBR: What do you hope to achieve with this initiative?
We understand that investors have specific goals to achieve at different life stages but may not have the time or expertise to manage a portfolio that delivers stable income in and out of the market cycle. The challenges of market uncertainties also mean that investors are unsure of when and where to invest. Some may postpone or abandon their investments to wait for market timing, resulting in lost opportunities in achieving their wealth goals.

Whether one is a saver keen to take on a little more risk (beyond cash) or an experienced investor looking for long-term wealth planning, the HSBC Managed Solutions – Asia Focused Income can help investors achieve their goals without the need to undertake the difficult task of timing the market themselves.

Diversification, a key feature of Managed Solutions, is important because different asset classes perform differently under changing market conditions. Diversification allows us to capture the best value while smoothing volatility over the long term.

The recent market corrections have created an attractive entry point for riskier assets, such as Asian high dividend equities, Asia high yield and local currency bonds, as well as global emerging market bonds.

SBR: What can you tell us about HSBC's Asia-Focused Income Fund in Singapore that is exclusively for SBR's editorial coverage?
Managed Solutions builds on a flexible asset allocation strategy to deliver income and long-term potential to investors. It adopts a disciplined, valuation driven approach, buying assets when they are cheap and selling them to reduce risk when they are expensive.

This approach, coupled with our portfolio diversification strategy of tapping multiple sources of growth and income in attractively priced assets with an emphasis on Asia, can help maximise return/yield and diversify risks. Instead of chasing short-term gains, we stay focused to help achieve investors’ investment goals.

We believe this makes Managed Solutions a compelling proposition for investors.