HSBC GAM’s Asia Credit Fixed Term Bond 2022, the Asia Credit Fixed Term Bond 2023 and the Global Corporate Fixed Term Bond 2022-2 recently received approval from Hong Kong’s Securities and Futures Commission, according to the regulator’s website.
This move follows the launch of the firm’s another FMP, the HSBC GIF Global Corporate Fixed Term Bond 2022 in June this year.
In regards to the June launch, Ricky Liu, senior portfolio manager for US and global credit, said the fund is intended to “provide investors with a stable product amid continued market volatility and expectations that the US interest rate cycle is approaching its end”.
HSBC GAM also has an FMP for sale to Singapore’s retail investors, the $222m Global Corporate Bond Fund 2020, which was launched in October 2016.
FSA contacted HSBC but it was unable to provide details on FMP strategy in time for publication.
Fixed term popularity
FMPs are piling up. This year, across Hong Kong, Singapore and Taiwan, a glut of asset management firms, including Aberdeen Standard, Amundi, Invesco, BNPP AM, Hang Seng and Eastspring, have readied or launched FMPs.
FMPs are in demand because they are in-and-out products, offering regular income for a specific time period. Compared to direct investment in a few bonds by individual investors, a fixed-maturity bond fund brings in benefits of diversification with a large pool of bond positions across different markets and industries.
They still carry risk, but unlike a regular bond fund, all principal is typically returned at maturity (if no defaults), plus investors receive income monthly or quarterly, as specified.
The products are expected to appeal to investors who want more certainty in terms of future income streams and interest rate risk.
The most recent launch came earlier this week when BEA Union Investment offered its Asian Corporate Target Maturity Fund 2023 which invests in US dollar-denominated Asian corporate bonds.
“We believe that a fixed term maturity strategy on high quality Asian corporate bonds helps investors to capture the current wide credit spreads triggered by the macro headwinds and to lock in an attractive total yield,” said Pheona Tsang, chief investment officer of fixed income at BEA Union Investment, said earlier.
