The aim of our euro fixed income strategies is to deliver attractive risk-adjusted returns over the long term through rigorous selection of issuers and sophisticated risk management.
We consider that European bond markets tend to incorrectly assess the underlying risks. To exploit these inefficiencies, several sources of performance with a low correlation can be combined to seek and maximise value. We believe that there are two major sources of alpha that offer opportunities.
Credit strategies: we focus on identifying market asymmetries arising from the lack of fundamental credit research and the large number of categories of investors operating in the market with different and sometimes opposing constraints (rating, return, ALM, hybrid securities, etc). These asymmetries create discrepancies between risk premiums (valuation) and the actual credit risk (default risk).
Government bond yield strategies: discrepancies between fundamental trends, valuations/expectations and yield curve movements. The portfolio management teams exploit bond market inefficiencies by combining, on one hand, the evaluation of risks associated with investing in interest rate markets and, on the other hand, the views and convictions of the portfolio managers.
Our investment process is mainly bottom-up, with a top-down component, which enables us to be reactive and to adjust our beta positions to reflect our economic forecasts. Given that market changes are not always linear, our process also seeks to generate alpha via relative value strategies.
Active hands-on management, underpinned by proprietary research
Independent management of each strategy in order to make the most out of the expertise of our portfolio managers
Rigorous approach to risk budgeting
A long track record in credit investment in Europe, dating back to 1968
Credit strategies covering all asset classes: sovereign bonds, corporate bonds, covered bonds, subordinated debt, hybrid bonds, CDS
An investment team with an average experience of 19 years in the sector, including experience of several market cycles and crises, which represents a substantial advantage in a period of uncertainty and high volatility.
The aim of this strategy is to generate attractive risk-adjusted returns by investing in euro-denominated corporate bonds having a minimum credit rating of Baa3/BBB- (Moody’s and Standard & Poor’s respectively), with the possibility to invest up to 10% in bonds with a high yield rating.
Intensive research and an active investment approach based on corporate fundamentals are prerequisites to generating consistent returns.
We are able to exploit inconsistencies between credit rating and relative valuation by identifying the best opportunities in terms of risk premiums.
The beta and duration of the strategy are managed so as to reflect economic and credit cycle expectations and to hedge/expose the portfolio against/to potential interest rate increases/decreases.
The investment process combines qualitative top-down macroeconomic and market analysis with structured bottom-up research in respect of individual issuers and bonds.
A long and solid performance track record (since 1992).
Investment professionals with an average experience of 19 years in the sector, including experience of several market cycles and crises, which represents a substantial advantage especially in a period characterised by high volatility and uncertainty.
The aim of this actively managed strategy is to generate attractive return with and moderate volatility over the long term, regardless of the credit cycle and interest rate changes.
An approach without any constraints can offer higher Sharpe ratios than the benchmark asset class over the whole of a cycle.
The strategy can mitigate the impact of market downturns due to flexible management of the cash component and dynamic exposure to the wide investment universe, thereby avoiding the sectors whose risk/return profiles are unattractive.
The strategy seeks to take advantage of market conditions and movements via dynamic beta and duration management.
Adopting a flexible investment approach, not tied to any index and based on risk management, this strategy can invest in a wide asset universe (government bonds, agency securities, covered bonds, credit, hybrid bonds, inflation-linked bonds, CDS, futures and options).
In-depth research and analytical capabilities supported by HSBC’s large global credit research platform, composed of more than 45 sector specialists covering almost all of the credit universe with the aim to identify investment opportunities in the investment grade, cross-over and high yield segments.
This strategy applies a prudent investment approach to the universe of euro-denominated high yield bonds, with a view to investing strategically in BB and B rated corporate bonds and, opportunistically, in investment grade or CCC rated securities.
Intensive research based on the analysis of fundamentals, in particular the careful selection of issuers, is vital for generating consistent returns.
Primarily bottom-up, with an issuer selection process with two objectives: to avoid drastic capital losses (using purely fundamental research) and to identify issuers offering the best opportunities in terms of credit rating and relative value within the investment universe.
A strong performance track record (since 1999) which has demonstrated resilience and consistency through several market cycles.
Using a flexible approach, the portfolio manager seeks to identify the high yield market segments whose risk/return profiles are the most attractive, with the possibility of investing in bonds not included in the benchmark indices.
The strategy seeks to outperform the Exane Eurozone Convertible Bond index by focusing on convertible bonds of European issuers, mainly denominated in Euro.
Euro-denominated convertible bonds have asymmetric risk profiles which provide investors with exposure to equity markets, while offering resistance to market downturns through the “cushioning” effect of the bond floor.
Our securities selection process is based on an in-depth technical and fundamental analysis, with a preference for bonds with a balanced profile in order to benefit from their convexity.
Launched in 1996, this strategy has one of the longest performance track records in the sector.
Convertible bonds are an integral part of our credit expertise and this investment segment benefits from our credit and equity markets research and analysis.
We firmly believe that European bond investors often incorrectly assess the underlying risks. To exploit these inefficiencies, we use several non-correlated sources of alpha to maximise outperformance.
One of these underlying risks is linked to environmental, social and governance (ESG) factors which, in our opinion, can have a significant impact on the fundamentals and performances over the long term.
By systematically integrating ESG criteria into our investment process, we benefit from information asymmetries.
The sustainable Euro bond fund implements a socially responsible investment (SRI) strategy whose objective is to select the best issuers, in terms of ESG approach, from an investment universe composed of euro-denominated corporate bonds and government bonds, with a minimum credit rating of Baa3/BBB- (Moody’s and Standard & Poor’s respectively).
Using a best-in-class approach, the strategy selects companies which, on the basis of our in-house research model, are ranked in the first two quartiles of each sector and 8 issues from the 3rd quartile (up to a maximum of 10% of fund assets). Companies in the 4th quartile and those from the tobacco and weapons sectors are excluded.
For government bonds, the geographical allocation is limited to securities having a minimum ESG rating.
The investment process and objectives are similar to those of our non-SRI funds, whose objective is to outperform the benchmark over the long term.
An SRI offering that complies with the highest transparency standards
- Adherence to the “AFG/FIR/Eurosif Transparency Code” in all of the SRI mutual investment funds managed by HSBC Global Asset Management
- Detailed reports and ESG profile of each portfolio position
A recognised and award-winning range of SRI funds
- “CIES Label” since 2005 for the SRI FCPE (corporate mutual funds) range
- “Novethic SRI Label” awarded every year since 2009 (date of creation of the label)
The socially responsible investment strategy has a long performance track record (initiated in 2004) and has been implemented in different market cycles. Throughout this period, the bond selection process has demonstrated its effectiveness and reliability.
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