Equity and bond holdings propel HSBC fund returns

The £181.88m fund sits in 14th place, out of a total of 124 funds, in the IMA’s Mixed Investment 20-60 per cent share sector.

The fund, managed by Julian York, easily surpasses the average return of 20.16 per cent for the peer group.

It is heavily invested in the UK at 79.72 per cent, more or less splitting its investments between equities and bonds to achieve its aim of providing above-average income with capital. The equity allocation in the fund stands at 45.72 per cent, while 47.50 per cent is allotted to bonds.

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Almost a quarter of the fund is placed in one holding, the HSBC MultiAlpha Sterling Bond, which invests in sterling-denominated bonds around the world.

The second biggest holding is the Cazenove UK Equity Income fund at 18.12 per cent, capitalising on the income opportunities provided by UK blue-chip stocks.

The total expense ratio for the HSBC fund is 1.91 per cent, while its AMC is 1.25 per cent. The minimum initial investment is £1000, with additional investments of at least £500 permitted.

The Swip Multi-Manager Diversity fund has proved to be more lacklustre in comparison. The £66.87m fund is placed 110th in the same sector due to three-year returns of just 7.12 per cent, 13.04 per cent below the peer group average.

Mark Harries and Simon Wood co-manage the fund, which aims to achieve long-term capital growth. The portfolio can be broken down into five key sectors: UK, US, fixed income, alternatives and cash.

Its number one holding is the RWC Europe Absolute Alpha fund at 8.3 per cent, while the BlackRock UK Special Situations fund is second at 8.1 per cent.

The fund’s total expense ratio is also among the highest in the Morningstar tables at 2.24 per cent. Its AMC is 1.25 per cent, while the minimum level for both initial and additional investments is £1000.

Adviser view

Darius McDermott, managing director of London-based Chelsea Financial Services, said: “The [HSBC fund] had pretty mediocre performance before Mr York arrived in 2011. Returns have been given a boost, the yield is attractive at 3.8 per cent and ongoing charges are lower than average.”


HSBC Income Fund of Funds
HSBC MultiAlpha Sterling Bond Class: 24.33%
Cazenove UK Equity Income: 18.12%
Fidelity MoneyBuilder Dividend: 12.04%
Schroder Income: 10.16%
M&G Corporate Bond: 4.86%

Swip Multi-Manager Diversity
RWC Europe Absolute Alpha: 8.3%
BlackRock UK Special Situations: 8.1%
BH Macro: 6.9%
Odey Opus: 6.2%
Absolute Insight Equity Market Neutral: 6.2%