HSBC Global Asset Management has introduced the GIF global macro II fund, a variation of its existing absolute return fund, GIF global macro.
The new fund will have the same investment strategy at the existing fund but will be leveraged as it will double up all the positions in the existing portfolio and is allowed to have twice the volatility. It will be run as a long and short multi-asset fund within a Ucits III framework, investing in equities, fixed income, currencies and cash, with the ability to take short positions using derivatives. Its focus on highly liquid assets enables the fund to have daily liquidity.
Portfolio managers Guillaume Rabault and Jim Dunsford, who have manage the existing fund since inception in June 2007, will construct the portfolio using quant-based analysis to identify market trends and macroeconomic research. They are looking to benefit from price anomalies to produce returns that have low correlation to major asset classes such as equities and bonds.
Rabault and Dunsford can invest in market-neutral strategies that take advantage of valuation differences across a given asset class. They can also use directional strategies where long positions are taken in assets that are expected to rise in value and short positions are taken in assets that are likely to fall.
HSBC says global macro is one of the most popular and flexible hedge fund strategies. It says the fund was launched due to demand from macro investors looking for higher returns who can accept greater volatility, for whom the existing fund was too conservative.
The fund may suit sophisticated investors with a higher risk profile but potential investors should not expect the new fund’s returns to be precisely twice that of the existing fund as a result of the doubling up of positions. This is because the impact of volatility means the higher the leverage, the bigger the difference in performance between a leveraged portfolio and an unleveraged portfolio.