HSBC Republic seeks external inflows
Murray: talking to external distributors
Hedge fund advisory arm of HSBC banking group establishes links with Zurich and Fineco in order to fill up its increasing product capacity
HSBC Republic Investments Limited (HRIL) is on the look-out for more third-party distribution partners to take up its increasing hedge fund capacity.
The group has recently forged links with Zurich’s distribution platform and also advises on a fund of hedge funds for Fineco in Italy.
“These people are looking for new hedge fund managers, as their existing funds are closing to new investors,” believes Jamie Murray, head of client servicing at HRIL.
“Talking to external distributors is a new departure for us,” admitted Mr Murray, who is hiring new marketing staff to meet the challenge. “We have always had the luxury of belonging to the HSBC group.”
Of the $18bn (e15bn) of hedge funds advised by HRIL, up to 60 per cent are currently held by wealthy clients of HSBC Private Bank. According to HSBC figures, the institution holds 10 per cent of aggregated assets in single strategy funds globally.
Internal fund flows have often resulted from meetings which HRIL has held with the private bank’s regional IAGs (investment advisory groups). Recent products created through this channel by HRIL have included the Alpha Advantage range – a mix of concentrated long-short equity funds overseen by Mr Murray’s group. He raised $90m for this product from private banking clients earlier this year.
Following this, he received a very specific request from the private bank’s Asian office.
“They said: ‘our clients are concerned about rising interest rates. Can you construct a note which invests in an underlying basket of hedg funds, with income distribution each year?’”
The product dreamt up by Mr Murray’s team had a zero to negative correlation with bonds, but similar risk-return characteristics, including a coupon paying device. “This was suitable for some private clients concerned with the direction of their bond portfolios and we raised $45m,” revealed Mr Murray. “But the distribution was internally focused. The challenge we are facing now is tying up with third parties.”
Murray: talking to external distributors
