22/06/2011 Author: Kapila Gohel

HSBC flagship FoHF allocates to Asia funds

HSBC’s flagship fund of hedge funds (FoHF) has made several allocations to Asian hedge funds, and is planning a series of additional moves into the space.

The $2.5bn HSBC Alternative Investments Ltd (Hail) FoHF has recently allocated to two of Asia’s largest hedge funds – Azentus Capital and Ortus Capital – Tim Gascoigne, global head of portfolio management, told HFMWeek sister publication Asia FM, as the fund increased its allocation to the region from 10% to 15% of the overall portfolio.

“That is a reflection of the opportunities we see. There are fewer hedge funds operating in Asia; these conditions offer significant growth,” stated Gascoigne. HSBC is now one of the largest investors in Azentus, an event-driven strategy launched by former Goldman Sachs veteran Morgan Sze and one of the biggest fund launches of the year.  

“In terms of the changes we have made to the portfolio in 2011, we have mainly focused on the increase allocations to Asian-based managers and increased allocations generally to emerging market strategies,” said Gascoigne. Hail has also recently launched a renminbi (CNH) share class.

“Previously we had a strong bias to European and US hedge funds but that has changed now. The focus has changed in the portfolio to drive performance forward in the fund and target 4%-6% over Libor as a return profile.” Hail has enjoyed a strong period of growth this year and returned approximately 3.1% YTD by mid-May.

The FoHF has increased its allocation to more long/short strategies which, “certainly has had an effect on the performance of the portfolio this year,” said Gascoigne.

The Hail fund has also looked at other areas, including currencies – hence the allocation to the $2bn Ortus Capital – as well as an unnamed China country focus strategy. In the emerging markets, the fund recently also made an allocation to a Latin America-focused macro strategy.