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HSBC to distribute hedge funds to clients in China

It has become the first international bank to obtain authorisation to do this onshore.
Red entrance gate opening to the forbidden city in Beijing - China

HSBC China has announced that its local private banking clients can now invest in hedge funds through a new trust plan issued by China Resources SZITIC Trust Company.

The underlying fund is managed by Pinpoint Private Fund Management, with which the bank has had more than 10 years of strategic collaboration.

HSBC said it hopes to provide eligible investors with alternative investment options to achieve a more diversified asset allocation to tackle the impact of market volatility.

“The low correlation between alternative and traditional asset classes provides investors with a wide range of risk, return and diversification options with higher flexibility,” said Ying Wang, head of investment and wealth solutions, wealth and personal banking, HSBC China.

“Institutions and high net worth as well as ultra high net worth investors are increasingly interested in alternative assets, especially hedge funds with diversified strategies.”

Hedge funds mainly invest in publicly traded stocks, bonds and financial derivatives, such as futures and options, and adopt more complex investment strategies compared with traditional securities funds.

Therefore, they can be used by qualified investors who are more experienced and have certain risk tolerance levels, for portfolio diversification, said the bank.

HSBC expects demand for alternative assets to grow in China as high net worth and ultra high net worth clients become more sophisticated in the approach they take to asset allocation.

The offering of hedge funds to private banking clients is HSBC’s latest initiative after it launched a new model for its global private banking business in mainland China in the first half of the year.

Going forward, the bank hopes to select and onboard more alternative investment strategies from its partners to enrich its range of asset management products with investment targets, including hedge funds, private equity, private debt and real estate funds.

Part of the Mark Allen Group.