HSBC launches GIF India Fixed Income fund in Italy

HSBC Global Asset Management has launched in Italy its GIF India Fixed Income fund.

Through the use of the Foreign Institutional Investor licence authorised by the Securities and Exchange Board of India, the new fund will invest primarily in domestic government and corporate bonds denominated in Indian Rupee. The fund can also invest in bonds issued in other currencies that have a strong India connection.

Launched on 20 August in Luxembourg, the fund will form part of HSBC’s Luxembourg-based Global Investment Fund (GIF) range, which has funds registered for sale in approximately 30 countries globally. The base currency is US dollars, although the underlying exposure will be to the Indian rupee.

The fund will be managed by HSBC Global Asset Management’s Asian fixed income team based across Asia with investment offices in Mumbai, Hong Kong, Taipei and Shanghai. This team, comprising 22 managers and seven analysts, currently manages approximately $30bn in Asian fixed income as of March 2012. The lead manager on the new fund is Gordon Rodrigues, who joined HSBC in 1994 and is head of Asian rates, foreign exchange and liquidity.

According to Rodrigues, there are several factors that make investing in the Indian fixed income market appealing.
The Indian bond market currently has one of the highest yields available anywhere in the world. The average gross yield in the domestic government bond markets is around 8.3%.

The Indian rupee is one of the most undervalued currencies globally based on the Purchasing Power Parity (PPP) measure and even a small reversal could potentially lead to gains for investors with a currency base from a developed country

Although underdeveloped in relation to the size of India’s economy, the bond market is currently sizeable, deep and liquid and has potential to grow substantially in terms of size and opportunity in the coming years. The economy, although facing challenges, could potentially outgrow the developed world.

“We are particularly happy to enlarge our offering to Italian institutional and retail investors who can now access to fixed income market particularly interesting and innovative as the Indian one, with a potential to grow substantially in the coming years. The launch of the Indian fixed income fund reflects HSBC’s ability to combine vast expertise and local presence to offer clients exposure to interesting and innovative asset classes,” said Matteo Pardi, head of wholesale continental Europe at the firm.

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