HSBC is going continental with the arrival of its European absolute fund.
Based in Guernsey and listed on the London and Channel Islands exchanges, the fund is an offshore investment trust that will be run by HSBC's international private banking arm HSBC Republic. The fund is aimed at high net worth individuals who are looking for a high risk, high return investment.
The fund will follow a fund of hedge funds approach by investing in between 20 and 30 hedge funds that invest in the UK and Europe. These will cover a wide range of hedge fund strategies, ranging from long, when stocks are bought at a low price in the hope that they will rise in value, to short, when stocks are sold when it looks as if their prices have peaked. It will also invest in arbitrage funds which identify markets which are going down and look to counterbalance these by investing in rising markets.
The HSBC European Absolute fund will be managed by Paul Dunning, chief executive officer of HSBC Republic Investments. He will head a team of ten specialist hedge fund managers based in London, New York and Geneva.
Hedge funds can be high risk investments, however by investing in a fund of hedge funds, this risk can be spread about more. HSBC Republic manages a total of twelve hedge funds, which invest in areas such as Europe, Japan and emerging markets. However this is only the companies second hedge fund.
According to Standard & Poor's the HSBC Republic global hedge fund is ranked 25 out of 70 funds, based on £1,000 invested on a bid to bid basis with gross income reinvested over one year to April 16, 2001.