HSBC Global Asset Management CIVETS fund

HSBC Global Asset Management has launched the first CIVETS fund, which is available to both retail and institutional investors globally.

The HSBC GIF CIVETS fund targets long-term returns from capital growth and income by investing in a diversified portfolio of equities from the stock exchanges of the CIVETS countries - Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa.

The fund however also has the ability to invest up to 25% in non-CIVETS nations which have similarly attractive demographics, such as Mexico, Nigeria, Philippines, Thailand, Malaysia and Saudi Arabia.

Domiciled in Luxembourg, the HSBC GIF CIVETS fund is part of HSBC Global Asset Management's flagship Global Investment Funds (GIF) SICAV range which is registered across more than 30 countries worldwide. 

The CIVETS nations, which are among the next generation of emerging markets, echo many of the demographic qualities inherent in larger developing markets such as the ‘BRIC' nations. Collectively the CIVETS group has a population of around 600m with an average age of 27 years, representing some 8% of the global population.

Each of the CIVETS countries has a relatively diverse and dynamic economy without the extreme dependence on external demand or commodity exports that characterise some parts of the emerging world. The countries also have a relatively low level of public debt as well as corporate and household debt. (See table below for an overview of the investment case for the CIVETS nations).

Sridhar Chandrasekharan, Global Head of Wholesale, HSBC Global Asset Management, said: "HSBC Global Asset Management is already a world leader in emerging markets, with some US$145bn assets under management in this asset class globally. The launch of a CIVETS fund extends our product range for clients who wish to use our expertise to access these markets."

The fund is managed by a team of four investment professionals who have an average investment experience of more than 11 years. Douglas Helfer, who has been with HSBC since 2006, and is manager of the HSBC GIF Russia Equity fund, is lead manager of the HSBC GIF CIVETS fund. In this role he will be responsible for the overall country asset allocation decision. His co-managers are Basak Yavuz and Andrew Brudenell, both Frontiers Markets portfolio managers at HSBC Global Asset Management while Nick Timberlake, Global Head of Emerging Market Equities will oversee the overall management of the fund.

The HSBC GIF CIVETS fund will typically hold between 40 and 60 stocks. The base currency of the fund is US Dollar. The minimum investment is US$5,000 for retail investors (A share class) and US$1,000,000 for institutional (I share class). The fund's annual management charge (AMC) is 1.75% and 0.875% respectively.

Colombia

The pro-business policies of Colombia's government are supporting the nation's economic growth, for example it has made efforts to invest oil revenues in the country's infrastructure and in job creation. As a result, Colombia has become a key destination for foreign investment and development in Latin America.

Indonesia

The nation's primary attraction is its labour competitiveness and vast pool of educated manpower, giving it the lowest unit labour costs in the Asia-Pacific region. The government is ambitious to emerge as a credible manufacturing hub and now has the ability to deliver infrastructure improvements more rapidly.

Vietnam

Vietnam is also showing promise as a viable and profitable new manufacturing hub in Asia. It ranks well on the world stage in terms of its labour cost advantage and wage determination flexibility, making it attractive for companies to set up manufacturing bases there.

Egypt

While the country has endured recent unrest, which could slow growth in the short term, once the political situation has settled down, we believe Egypt will regain its growth trajectory. Egypt also has fast growing ports on the Mediterranean and the Red Sea joined by the Suez Canal, which potentially could develop as trade hubs connecting Europe and Africa. The country has a large young population and is now focusing on its vast untapped natural gas resources. Egypt's economy is the largest in the Arab League bloc.

Turkey

Turkey acts as a bridge between the EU and the vital energy supplies from the Caspian Sea, Russia and the Middle East. It has strong fundamentals and its domestic market is dynamic. Turkey benefits from an association agreement with the EU as well as strong trade and investment relations.

South Africa

South Africa is already a key trade and transit hub and the most developed country on the continent but it also holds other advantages. It has become a diversified economy, being rich in resources like gold and platinum and also has attractive manufacturing investment.

For more information, visit hsbc.co.uk.