Halbis Investors Flock To Macro, UCITS III And… Market Neutral?

Apr 10 2009 | 11:03am ET

HSBC Global Asset Management this week added a new currency hedge fund to its portfolio, with several other new products in the pipeline.

FINalternatives spoke with Bill Maldonado, head of alternative investments at Halbis, the US$1.5 billion active management specialist within HSBC GAM, about the new fund, the group’s strategy and where investors are looking to put their money to work in a depressed market environment.

FINalternatives: What was the impetus for the launch of the HSBC GIF Global Currency Fund?

Maldonado: We had a number of institutions that were interested in the product and it was helpful to them that it was in a UCITS format. We’ve been running this strategy for a few years now so we have a track record and know what it’s capable of delivering.

The fund was launched with US$10 million in seed capital, and it could take in US$2 billion without any significant issue. It’s a systematic fund, so there is a strong model and quantitative underpinning. There is also an important judgmental component, which we believe is a superior combination: allowing the managers to do what they best and allowing the system to do what it does best. The key differentiator for the fund is that it employs a multi-strategy approach to currencies. Some are fast-moving strategies and some are slow-moving. So we have sub-models within the framework, which are looking for particular anomalies, mainly in Group of 10 currencies.

FINalternatives: How are institutional investors receiving the fund?

Maldonado: Fundraising is going well for the currency fund. We have a lot of interest, but I’m not sure anybody is ready to invest today. We’re expecting to see clients come into the fund within the next few weeks.

FINalternatives: What other new products is Halbis working on?

Maldonado: We have a number of products that we’re looking to launch, but we have to think about what the team will look like: Will they be in-house, or do we have to add to a team? It’s difficult to name them now because some products may never see the light of day, but I hope that within the course of the year, we can launch one or two more products.

FINalternatives: Does Halbis typically rely on internal talent for launches, or does it use external managers?

Maldonado: We’ve launched funds from within and hired external teams to run our funds, but we want to launch the best funds possible and often that means using internal resources. We have outstanding managers in many areas, particularly in the emerging markets. However, we’re not in the business of seeding external managers. There are other parts of HSBC that might do that.

FINalternatives: How did your portfolios fare last year? Was the firm hit hard by redemptions?

Maldonado: We were mixed. We had some funds that were up, we had other funds that were flat and then we had some funds that were down. We did see redemptions, particularly in the third and fourth quarters, and we saw those lasting a little bit into the beginning of this year. But I’m glad to say that we’re now experiencing net subscriptions in some of our strategies for the first time in a while.

FINalternatives: What particular strategies are currently enjoying inflows or interest from investors?

Maldonado: We have a global macro fund and it is seeing inflows. Another area that is getting traction with a lot of investors is market neutral, which historically has not been popular because their headline returns were often not astronomical. This year, we’ve seen a renewed interest in that, which is very welcome because we’ve always believed very strongly in that are.

There is also interest in UCITS III strategies, but it’s difficult for me to pin down the reasons for that. Certainly, it’s a more regulated vehicle than a traditional hedge fund. They do seem to be getting more traction but I haven’t heard of a totally coherent explanation as to why that’s the case, which means there’s not a single driver.

Investors are also looking at managed accounts, and there’s a clear trend in discussing those things within our firm but I’m not sure if that’s going to result in actually doing more managed accounts. We’re certainly engaged in more discussions about them.  

FINalternatives: How has Halbis had to change its structures to accommodate investors?

Maldonado: We have always run a plain-vanilla structure, so we’ve never had lockups or gates. It would be a terrible thing if we had to gate investors. We’ve always had very standard fees, 1.5/20 or 1/20, and we’ve always provided a very high degree of transparency. I suspect there are people having to move in that direction, but we’ve always occupied that part of the spectrum so for us, there hasn’t really been any change.

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