The HSBC GIF European Alpha Equity fund will seek opportunities - via a market neutral strategy - across developed Europe, implemented primarily through equities and equity swaps.
The investment vehicle, which offers daily liquidity, will target equity-like returns with a maximum annualised volatility target of 10%, with minimal correlation to European equities. The fund will be managed by a team of four, with Vis Nayar as lead manager.
In a universe of close to 700 stocks, the team will look to exploit fundamental equity pricing anomalies using both complementary quantitative and qualitative strategies.
The fund will use more short positions to diversify risk, holding about 80 stocks, typically split between 35 long and 45 short. The fund forms part of HSBC's Luxembourg-domiciled Global Investment Funds (GIF) range, which is available for sale in around 35 countries.
HSBC has been running the same strategy within its flagship European Alpha Fund, domiciled in the Cayman Islands, since April 2008. Up to the end of February 2010, the fund has outperformed the MSCI Europe Index, generating returns of 24.7% compared to a loss of 20.1% by the index.
"This Ucits strategy builds upon the same principles of HSBC's flagship European Alpha fund," global head of alternatives distribution Charles Robinson says. "Our existing investors know we piloted this over the past two years to complement, rather than cannibalise, our existing fund.
"This is not simply a UCITS clone of our popular Cayman domiciled European Alpha fund. Rather, it is a strategy constructed with daily liquidity in mind, greater capacity, and a risk/return profile that falls somewhere between our base class and our 2.5x levered share class. While it is the same team and the same philosophy, it does differ as the low correlation with the existing fund reveals."
The minimum investment in the new fund is $5,000 for the retail share class with a management fee of 1.5% and a performance fee of 20% over one month Euribor.