Smart beta and factor-based investing
Smart beta and factor-based strategies offer investment options that lie between active and passive investing.
We offer off-the-shelf and bespoke smart beta and factor-based strategies with global, regional and country-specific variations.
HSBC Asset Management has a long track record of partnering with clients to provide best in class off-the-shelf and bespoke smart beta strategies.
- Multi-factor strategies provide controlled exposure to multiple factors (Value, Quality, Low Risk, Small Size, Momentum) aiming for consistent outperformance relative to a traditional index equivalent and with targeted tracking error. Through our proprietary risk models, we tailor our factor-based strategies to incorporate client-specific guidelines including bespoke tracking error levels, factor exposures and ESG constraints
- Fundamental strategies include our suite of Economic Scale Equity (ESE). Launched in June 2012, ESE strategies weigh companies by their economic footprint, aiming for better risk-adjusted returns relative to a market cap-weighted index. Our methodology was created “in house” by our quantitative research team
- Volatility focused strategies combine quantitative discipline and qualitative judgment. We capture quality companies based on attractive profitability and valuation profiles and construct a portfolio optimised for lower volatility. Proprietary fundamental research and integrated Environmental, Social and Governance (ESG) analysis are used to confirm stock volatility characteristics and whether company profitability levels can be sustained
Fundamental strategies - Economic Scale Equity (ESE)
Aim to capture equity beta and attain higher risk-adjusted returns relative to traditional indices.
- Cap-weighted indices can be inefficient and stock prices can be noisy relative to their fair value
- A weighting approach that captures a company’s economic activity (its contribution to gross national product (GNP)—or its “value-add") yields stable weights with low linkage to share prices
- We calculate each company’s “value-add” — the difference between its output (sales) and inputs (its purchases of goods and services from other businesses)
- A company’s weight is determined by its “value add” / sum of all company “value adds”
- Resultant factor exposures are generally tempered
- Only liquid names are included
- Systematic rebalancing leverages potential market mispricing while keeping turnover low
Company “value-add” amounts are disbursed to equity holders, debt holders, employees and the government.
- A theoretically sound and intuitive approach that breaks the link between index weight and market price, enabling superior diversification and better capture of the noise that influences market prices
- A proprietary methodology that is cost-efficient and transparent
- Pure play on rebalancing and traditional index inefficiency
- Limited style bias facilitates use as the core building block of an equity allocation
- A proven track record since 2012
The value of investments and any income from them can go down as well as up and investors may not get back the amount originally invested. Where overseas investments are held the rate of currency exchange may also cause the value of such investments to fluctuate.
This page is prepared for general information purposes only and does not have any regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive it. This page does not constitute an offering document and should not be construed as a recommendation, an offer to sell or the solicitation of an offer to purchase or subscribe to any investment.
This advertisement has not been reviewed by the Monetary Authority of Singapore.
Investors and potential investors should not invest in the Fund solely based on the information provided in this document and should read the prospectus (including the risk warnings) and the product highlights sheets, which are available upon request at HSBC Asset Management (Singapore) Limited (“AMSG”) or our authorised distributors, before investing. You should seek advice from a financial adviser. Investment involves risk. Past performance of the managers and the funds, and any forecasts on the economy, stock or bond market, or economic trends that are targeted by the funds, are not indicative of future performance. The value of the units of the funds and income accruing to them, if any, may fall or rise and investor may not get back the original sum invested. Changes in rates of currency exchange may affect significantly the value of the investment. AMSG has based this document on information obtained from sources it reasonably believes to be reliable. However, AMSG does not warrant, guarantee or represent, expressly or by implication, the accuracy, validity or completeness of such information.
HSBC Asset Management (Singapore) Limited
10 Marina Boulevard, Marina Bay Financial Centre, Tower 2, #48-01, Singapore 018983
Telephone: (65) 6658 2900 Facsimile: (65) 6225 4324
Company Registration No. 198602036R