HSBC GIF Multi-Asset Style Factors
Diversified strategy designed to provide long-term total return with a low correlation to traditional asset classes
Our philosophy
- Multi-asset factor investing is the 3rd generation of portfolio construction after balanced portfolios
- A factor-based approach implies a better understanding of the drivers of a portfolio risks and returns (between assets and within an asset class). It enables investors to manage risk, improve returns and achieve greater diversification
- Style factors are weakly correlated with traditional asset classes and represent a new source of potential return and diversification for investors in a context of low expected returns
The value of investments and any income from them can go down as well as up and investors may not get back the amount originally invested.
Why Multi-Asset Style Factors?
- Well diversified (across styles and asset classes): it has no structural exposure to any asset class hence is weakly correlated to traditional balanced portfolios
- Our approach is focused and disciplined. We have selected 3 well-established and robust style factors that have been delivering persistent risk premia across equity, bond and currency markets. The investment process is systematic and transparent. There is no manager intervention to tilt the portfolio away from this systematic approach
- The investment strategy is implemented at the aggregate level using highly liquid derivatives only
Our process
Uses a systematic approach which aims to capture 3 robust style premia (value, momentum and carry) across 3 asset classes (equity, bond and currency) through 9 customised style portfolios. Each style portfolio combines long and short positions, to capture the style premium in its "purest" form. The allocation of each style portfolio derives from the ranking of the investment universe on a defined metric: the style portfolio is long the better ranked assets, while being short the lower ranked.
The 9 style portfolios are then combined to maximise diversification across styles and asset classes, with no factor timing.
The strategy is implemented using highly liquid derivatives only. Only one portfolio is actually implemented, once all style portfolios positions have been netted.
HSBC strengths
- At HSBC Asset Management, we entered the market in the early 2000s and propose factor investing alongside our more traditional investment strategies in equity, fixed income and Multi-Asset
- Strong research teams and proprietary portfolio construction tools support the investment team decision making
Focus on
The value of investments and any income from them can go down as well as up and investors may not get back the amount originally invested. The value of the underlying assets is strongly affected by interest rate fluctuations and by changes in the credit ratings of the underlying issuer of the assets.
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