HSBC launches China Government Local Bond Index Fund

HSBC Global Asset Management has announced the launch of the HSBC China Government Local Bond Index Fund1, which is designed to offer investors a cost-efficient way to access China’s government bond market.

The fund will track the performance of the Bloomberg Barclays China Treasury and Policy Bank 9% Capped Bond Index. It will be domiciled in Ireland under HSBC’s ICAV platform, which facilitates access to funds globally.

The fund will be managed by HSBC Global Asset Management’s passive fixed income team, led by Head of Passive Fixed Income, Sebastien Faucher. The team currently manages around USD6.9 billion of assets in different strategies.

Faucher said of the launch that “With global yields at historically low levels, investing in China onshore bonds can offer investors the yield premiums they are searching for. At the same time, our view is that this asset class is far less impacted by global risk sentiment, offering compelling diversification benefits.”

“As China opens up its bond market to overseas investors, foreign ownership in its onshore government bonds and policy bank bonds has picked up to around 8% and 3% respectively3 and is expected to rise further in the coming months. This presents significant opportunities, and our China presence and expertise mean we’re ideally positioned to help investors seize them,” Faucher continued.

HSBC Global Asset Management has a strong track record in managing Chinese assets since 1992 and currently manages USD84 billion in Asian fixed income and USD2.8 billion in onshore and offshore Chinese Fixed income as of June 2019, according to a press release. The HSBC Group has been active in China for over 150 years and has the largest network amongst foreign banks in the country.