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HSBC gets in on booming sector

HSBC Investments OpenFunds

HSBC Open Global Distribution Fund

Type: Oeic fund of funds

Aim: Income and growth by investing globally in fixed income, equities, property and commodities through other investment funds

Minimum investment: Lump sum £1,000, monthly £50

Investment split: 57% fixed income, 30% equities, 8% property, 5% commodities/natural resources

Isa link: Yes

Pep transfers: Yes

Charges: Initial 4%, A shares annual 1.25%, B shares 1.5%

Commission: Initial up to 4%, renewal A shares annual 0.5%, B shares 0.75%

Tel: 0800 181890

The HSBC Open global distribution fund is a global multi-asset fund-of-funds with scope to include hedge funds, private equity and currency funds alongside mainstream investments such as equities, bonds and property. It will be managed by Nicholas Pothier and James Hughes of HSBC Investments’ UK multi-manager team.

Considering how this fund will fit into the market, Capital Trust Financial Management partner Bruce MacFarlane says: “Business is booming in the fund of funds arena, which is presumably why HSBC wants to increase its slice of this growing investment sector.”

According to MacFarlane, the attraction of funds of funds is not just down to clever marketing. “Funds of funds provide investors with a good core product which incorporates geographic diversification and asset class spread of risk,” he says. “ IFAs and their clients can therefore relax in the knowledge that their monies are being constantly managed by the HSBC team via a portfolio of only the best and most suitable funds on the market.”

MacFarlane notes that the job of the HSBC multi-manager team is to navigate the client’s portfolio through the global investment minefield and bring a level of expertise not always available from the adviser. This may include access to non-traditional assets such as private equity and hedge funds. “The investment strategy, charges and adviser remuneration are all in keeping with this sector of the market,” says MacFarlane.

When asked what he dislikes about the fund MacFarlane says: “There is nothing I would fault the fund on. It looks like a well-rounded and well thought out fund of funds. The total expense ratio, depending which class of share selected, is expected to be 2.25- 2.5 per cent. This is not bad for an unfettered fund of funds. However, at the end of the day it is the performance that really matters.”

MacFarlane concludes: “The market place for funds of funds is already well saturated by most of the well known fund management groups. Companies like New Star, Jupiter and Fidelity will all provide HSBC with competition in this investment sector.”

BROKER RATINGS

Suitability to market: Good

Investment strategy: Good

Charges: Average

Adviser remuneration: Good

Overall 8/10

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