(overnight fund an open ended debt scheme investing in overnight securities) park your ... ·...
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HSBC Overnight Fund
October 2019
(Overnight fund – An open ended debt scheme investing in overnight securities)
Park your surplus money with confidence
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What are Overnight Funds and where do they invest?
Debt instruments* Risk Profile Price Risk
TREPS (Tri Party Repos) Low Nil
Reverse Repo Low Nil
Overnight Fund’s underlying investment reflect its lowest risk
• The primary objective of these funds is to seek to generate returns commensurate with low risk and
providing high level of liquidity, through investments made primarily in overnight securities having maturity
of up to 1 business day.
• Risk is low as interest rate changes may not affect the price of the security
• Overnight funds are debt funds that invest in debt and money market instruments having maturity of up to
one business day
* Above list is not exhaustive and for illustration purpose only. Overnight funds can invest in other instruments that includes Commercial Papers (CP), Certificate of Deposits (CD) and T-Bills
with the maturity of 1 business day. Please refer the offer document for complete list of investment options.
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Positioning of Fixed Income funds
Liquid Funds
Ultra Short Duration Funds 4
Short Duration Funds 3
Gilt Funds 2
RIS
K
RETURN
Med-Long Duration Funds 1
^^General strategy followed by the fund categories. Above list is not exhaustive and for illustration purpose only
* Typical duration / maturity period of the investment securities where fund invests$ Overnight Fund redemption – the fund endeavors to make the payout within one business day on redemption.1 An open ended debt scheme investing in instruments with Macaulay duration between 4 to 7 years 2 An open ended debt scheme investing in government securities across maturity3 An open ended short term debt scheme investing in instruments with Macaulay duration between 1 year and 3 years 4 An open ended ultra-short term debt scheme investing in instruments with Macaulay duration between 3 months and 6 months 5 An open ended low duration debt scheme investing in instruments with Macaulay duration between 6 months and 12 months
Fixed Maturity Plans
CG
CG
Accrual + CG
Accrual
Accrual + Liquidity
Liquidity
Investment
Strategy ^^
Across maturity
4 to 7 Years
1 to 3 Years
3 Years
3 to 6 Months
Up to 91 days
Duration / Maturity*
Credit Risk Funds Capital gains (CG) Strategic
Low Duration Funds 5 Accrual + Liquidity 6 to 12 months
Dynamic Bond Funds CG Across durations
Overnight Funds$ Liquidity 1 business day
Overnight Funds are placed at the lowest risk level compared to other fixed income funds
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Benefits of Overnight Funds
** As per the Regulations, the Overnight Fund shall dispatch the redemption proceeds within 10 Business Days from the date of acceptance of redemption request. The Fund will endeavor to dispatch
the redemption proceeds in 1 Business Day from the date of receiving a valid redemption request.
Lowest volatility
Lowest risk
Reasonable risk adjusted performance
High liquidity**
Overnight funds offer relatively lower volatility compared to other fixed
income funds
Overnight funds carry no interest rate risk and lowest credit default risk
vs other fixed income funds
Overnight funds can deliver consistent and reasonable risk adjusted
performance vs traditional saving products
Overnight funds are one of the most liquid investments available in the
market with redemption availability on any working day
Less volatile + Less risky + Highest liquidity = Reasonable performance
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Key differentiator of Overnight Funds - lowest volatility
Overnight funds represented by CRISIL Overnight Index here
Volatility is represented by Standard Deviation on daily performance for the respective periods, data as at September 2019
Overnight Funds offer lowest volatility
0.0000%
0.0020%
0.0040%
0.0060%
0.0080%
0.0100%
0.0120%
0.0140%
0.0160%
0.0180%
7 days 15 days 1 month 2 months 3 months
Volatility of Overnight index over Liquid Fund index
CRISIL Overnight Index CRISIL Liquid Fund Index
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Differences between Overnight and Liquid Funds
• Whilst both categories are positioned as liquidity solutions there are some critical differences
• Overnight funds carry lower maturity than Liquid funds
• Overnight funds invest in debt securities maturing in 1 business day while Liquid Funds invest in debt
securities maturing in upto 91 days
• Ideally, anyone who wish to park their surplus money with the least amount of risk can invest in overnight funds
1 day
Up to 91 days
0
10
20
30
40
50
60
70
80
90
100
Overnight Funds Liquid Funds
Ma
turity
perio
d (
days)
Overnight funds offer lowest maturity
Overnight Funds
No
interest
rate risk
Lowest
credit
risk
Overnight Funds are not exposed to interest rate and have lowest credit risk
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How have Overnight Funds fared?
Source: ICRA, data as at September 2019, Periodic annualised returns based on overnight funds category returns,
Past performance may or may not sustain and is not an indication of the future performance
Overnight Funds have delivered reasonable risk adjusted returns
0
1
2
3
4
5
6
7
1 Day 7 Days 15 Days 1 M 3 M 1 Y
An
nu
alis
ed
re
turn
s %
Period
Overnight Funds category performance
Minimum Maximum Average
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Overnight Funds - A solution to your one day investment worries
Subject to lowest
volatility
and lowest risk
compared to other
mutual fund categories
Offers highest liquidity
with redemption
availability on any
working day
Overnight funds can
deliver consistent
reasonable risk adjusted
performance compared
to traditional saving
instruments
Lowest volatility & risk High liquidity**Reasonable risk
adjusted returns
** As per the Regulations, the Overnight Fund shall dispatch the redemption proceeds within 10 Business Days from the date of acceptance of redemption request. The Fund will endeavor to dispatch
the redemption proceeds in 1 Business Day from the date of receiving a valid redemption request.
Best suitable to park idle money for reasonable returns and high liquidity
Presenting,
HSBC Overnight Fund(Overnight fund – An open ended debt scheme investing in overnight securities)
Park your surplus money with confidence
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The scheme aims to offer reasonable returns commensurate with low risk and high degree of
liquidity through investments in overnight securities
Type of scheme - Overnight fund – An open ended debt scheme investing in overnight
securities
Benchmark – Crisil Overnight Index
HSBC Overnight Fund (HOF)
The above investment list is indicative and not exhaustive. Overnight funds can invest in above instruments having the maturity of 1 business day.
• TREPS & reverse repos
• Money market instruments
• Certificate of Deposits (CDs)
• Commercial Paper (CPs
• Debt obligations of government agencies
and statutory bodies
• Debt obligations of banks
• Securities issued by Central / State
governments
• Bank Fixed Deposits as permitted by SEBI
• Bills of Exchange / Promissory Notes
• Corporate debt
• Securitised Debt
• Other domestic fixed income securities
Where can the fund invest?
The fund offers reasonable returns commensurate with low risk and high degree of liquidity
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HSBC Overnight Fund (HOF) - investment strategy
HSBC Overnight Fund aims to deliver returns in line with overnight call / money
market rates.
The scheme will have low risk and offer a very high degree of liquidity as it will invest
only in overnight securities.
Investments would be made normally in overnight securities including Tri-party Repo
/ reverse repos, debt instruments with overnight maturity / liquidity.
Offers return in-line with existing overnight call / money market rates
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Who should invest in HSBC Overnight Fund (HOF)?
Source – HSBC MF, Note - Above list is an indicative list and is not exhaustive
Park surplus money
HOF is well suited for investors looking to park their surplus money as the fund provides reasonable return
potential with high liquidity
Emergency funds
The fund is well suited for investors looking to park their emergency funds for short term such as 1 day and earn
reasonable returns with better access to funds
High quality, high liquidity and low risk
HOF is also best suited for investors who would like to invest in a low volatile, high quality fixed income portfolio
with easy redemption access
Investors with investment horizon of 1 day to 1 month
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Fund Name HSBC Overnight Fund
Benchmark CRISIL Overnight Index
Minimum
Application
Amount
Rs 5,000/- per application
Minimum
Application
Amount
(SIP)
Rs. 500 (monthly)
TypeOvernight fund – An open ended debt scheme
investing in overnight securities
Plans /
Options /
Sub options
Regular, Direct plans, Growth option,
Daily Dividend (Reinvestment),
Weekly Dividend (Payout and Reinvestment),
Monthly Dividend (Payout and Reinvestment)
Loads
(including
SIP / STP
wherever
applicable)
Entry Load* : Nil
Exit Load^:– Nil
STP/SWP Available
Fund
ManagersKapil Punjabi
^The exit loads set forth above is subject to change at the discretion of the AMC and such
changes shall be implemented prospectively
*In terms of SEBI circular no. SEBI/IMD/CIR No.4/ 168230/09 dated June 30, 2009, no entry
load will be charged by the Scheme to the investor effective August 1, 2009. No exit load (if
any) will be charged for units allotted under bonus / dividend reinvestment option.
HSBC Overnight Fund (HOF)
Investment Objective - The scheme aims to offer reasonable returns commensurate with low risk and high degree
of liquidity through investments in overnight securities. However, there is no assurance that the investment
objective of the Scheme will be achieved.
Annexure:
HSBC Global Asset Management, India
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A global network of local experts
Investment professionals working across key locations
1. Asia-Pacific includes employees and assets of Hang Seng Bank, in which HSBC has a majority holding.
2. HSBC Jintrust Fund Management company is a joint venture between HSBC Global Asset Management and Shanxi Trust Corporation Limited.
*Alternatives assets include USD3.6bn from committed capital (“dry powder”).
**Other is the assets of Hang Seng Bank, in which HSBC has a majority holding, and of HSBC Jintrust Fund Management, a joint venture between HSBC Global Asset Management and Shanxi Trust Corporation Limited. Source: HSBC
Global Asset Management as at 31 March 2019. Any differences are due to rounding.
HSBC Global Asset Management offices - Countries where our investment teams sit are in bold
Canada
USA
Mexico
Argentina
Bermuda
UK
Sweden
Luxembourg
JerseyFrance
Spain
Switzerland
Malta
Italy
Austria
Germany
Turkey
Saudi
ArabiaUAE
India
Singapore
Hong Kong
Taiwan
Japan
Australia
China2
Presence in
26 countries
and territories
Around 600investment
professionals
81Americas
358EMEA
169Asia-
pacific1
USD470.2bn under management
By asset class (USDbn)
Fixed Income (179.2)
Equity (71.9)
Multi-Asset (99.0)
Liquidity (67.2)
Alternatives (26.8)*
Other (26.1)**
Americas (89.1)
EMEA (240.1)
Asia Pacific (140.9)
By region (USDbn)
Wholesale (228.7)
By client type (USDbn)
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HSBC Global Asset Management, India – expertise and experience
The investment management team manages/advises strategies with assets across investment categories under
Mutual fund and Portfolio Management Services
Data as at October 2019
INR 38,764 Cr
assets under management
Strategy
AUM
(INR Cr)
Equity – Domestic 2493.4
Fixed Income – Domestic 6672.7
Hybrid – Domestic 761.1
Fund of Funds –
Domestic362
Fund of Funds – Offshore 46.1
Offshore advisory (Equity
and Fixed Income)28429
Total AUM 38764
Expertise in managing Indian equity and debt
Managers/sub-advisors of Indian equity and debt assets from last 17 years
Differentiate Product offerings
Clear and differentiated product offerings across asset classes
Recognised leader in emerging markets asset management
International experience
Global presence, local knowledge
Ability to identify and position for global trends
Supported by global perspective on long term asset prices
Inputs on impact of macro economic developments on Indian fixed income markets
On the ground presence combined with global oversight
Personal local relationships combined with Executive Management engagement
and global support through dedicated Official Sector Institutions team based in
London
Tailored and bespoke approach when working with Official Sector Institutions
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Fixed Income investment philosophy
The information above is provided by and represents the opinions of HSBC Global Asset Management and is subject to change without notice
Fixed Income investment process of HSBC Global Asset Management, India operates on three
major pillars
– Robust risk management
– Proactive liquidity measures
– Optimised returns
Out philosophy is that liquidity management must be focused on risk management
– Our aim is to preserve capital and provide liquidity
Our investment process seeks to manage credit, liquidity, and interest rate risks effectively
Asset management process is guided by:
– In-depth research, assessment
– Monitoring of various potential risks as per the global standard set by the Regulator & HSBC groups internal
guidelines
‘True to Label’ products
– Duration and credit strategies are ‘true to label’
– We do not use ‘proxy’ for credit quality
– Our duration strategy is played out using a combination of instruments rather than concentrated securities
A holistic risk approach to a well diversified portfolio
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Email: [email protected]
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