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HSBC hard-closes APAC small cap fund

HSBC GIF Asia ex Japan Equity Smaller Companies Fund will be closed to new subscriptions from 10 May, according to a statement from the fund sponsor.


HSBC Global Asset Management said that it will be closing the fund temporarily due to liquidity concerns. 

According to the firm, Asia’s small cap universe by its nature is not very liquid. Over the past five years, the asset class has seen periods of volatility, resulting in challenging liquidity conditions, it added. 

“HSBC has capped the size of the fund to ensure that the best interests of existing investors are protected,” the firm said in the statement.

“As liquidity is generally much lower for companies in the small cap universe compared to the overall market, investment opportunities can become more limited as subscriptions of the fund increase,” Stephen Kam, the firm’s senior product specialist for Asian equities, said in the statement.

The measure can be reversed if the AUM falls below the hard close threshold, it added.

The fund manages around $1.3bn in client assets. It has been co-managed by Elina Fung and Alex Kwan since 2012. It invests in companies in Asia ex-Japan with a market capitalisation of $4bn or below.

“The decision also allows our investment team to continue to invest in similar opportunities that have helped generate the strong returns seen in the past,” Kam added.

The three-year performance of the HSBC GIF Asia ex Japan Equity Smaller Companies fund versus its benchmark ending 27 April, according to FE data.



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