The Hang Seng Global Bond Fixed Maturity Fund 2022 (II) has been authorised for sale by the Securities and Futures Commission (SFC), according to the Hong Kong regulator’s website.
It follows the firm’s launch in September of an FMP with a global bond mandate and an FMP issued in July that invests in Asian fixed income securities.
Hang Seng was unable to provide FSA with further details about its latest FMP in time for publication.
However, Belle Liang, head of investment advisory at Hang Seng, told FSA last month that the firm had responded to investor demand by introducing about 12 portfolios this year that only contained FMPs. She believed demand would continue and that the bank was preparing FMP portfolios, built from third-party products as well as Hang Seng’s own funds.
FMPs have gained popularity among global investors this year on expectations of falling US interest rates and bond yields, precipitating a search for products that could generate a reliable source of income for a specified time period.
FMPs aim to provide future cash flow security, offer low volatility and mitigate interest rate risk, but income, returns and capital are typically neither guaranteed nor protected.
Nevertheless, in Hong Kong alone five SFC-authorised FMPs launched this year to the end of September attracted net inflows of around $1.55bn from investors, according to a report from Boston-based consultancy firm Cerulli Associates.
The final quarter of this year has seen further issues by BEA Union, HSBC, Invesco and Value Partners that have targeted retail investors, taking the total to 13 – including the latest offering by Hang Seng, but excluding products sold exclusively to the private banking market – according to SFC data.
During the second half of the year, FMPs offered globally increasingly focused on specific segments of the fixed income market, such as emerging markets and corporate debt, in order to differentiate themselves and tap into higher yields. For instance, seven of the Hong Kong FMPs launched this year invest only in Asia bonds, according to data from the SFC.
Cerulli noted that the FMPs offered in Asia, especially in Hong Kong and Singapore, shifted their investment focus to Asia and emerging market bonds because the asset class has offered better yields compared to developed market bonds.