Hedge funds

Hedge Funds are sophisticated investment avenues, encompassing a wide array of trading strategies across different asset classes and markets. They utilize advanced techniques, including short selling, to mitigate market risks and aim for positive returns regardless of market trends. Suitable for experienced and well-informed investors, these funds can pose significant risks. At HSBC, we leverage our extensive global expertise and rigorous due diligence processes, honed since 1989, to provide our clients with tailored hedge fund investment advice, navigating them through the complexities of the hedge fund landscape and its ongoing evolution.

• Enhanced returns: Incorporating hedge funds into your portfolio can refine its risk-return dynamics. This is due to hedge funds' ability to capitalise on both upward and downward market trends, including employing strategies like short selling. Such versatility provides unique return opportunities not typically available through traditional investments
• Portfolio diversification: Hedge funds introduce a broader spectrum of investment strategies to a traditional portfolio, thereby injecting a layer of diversified returns. Especially in scenarios of rising interest rates, the active management approach favoured by hedge funds can be particularly advantageous due to their ability to exploit market volatilities and reduced correlations
• Alignment of interests: A distinctive feature of hedge funds is the significant personal investment of managers in their funds, ensuring a strong alignment of interests with investors. Furthermore, the dual fee structure—comprising both a management fee and a performance fee—motivates managers to strive for positive returns, directly linking their compensation to the fund’s performance
• Access to expertise: Access to skilled active management. Portfolio Managers interest are aligned with their clients as typically a substantial amount of the manager’s own money is invested in the sophisticated strategies. 

Hedge Funds at HSBC

• Vast experience: At HSBC, our client-centric approach, combined with our rich experience and deep insights, cements our robust reputation in hedge fund investments
• Strong industry relationships: Our longstanding relationships with leading hedge funds worldwide enables us to leverage these relationships for enhanced manager engagement on our esteemed platform, fostering greater transparency and deeper insights
• Global investment framework: Our comprehensive global investment infrastructure ensures the implementation of rigorous governance and extensive risk oversight across all invested hedge funds and client portfolios, both commingled and customised
• Industry recognition: With vast experience and proven track record, we are today amongst the largest hedge fund investors globally and have received numerous industry awards
• Investment philosophy: We believe that markets contain inefficiencies which can be exploited by hedge fund managers who exhibit the skill necessary to deliver excess returns. We identify such talent through our global, dynamic, and proven research process

What are hedge funds?

If you've ever wondered about hedge funds – what they are, who they're suitable for, and how they function in the financial market – then this video is for you. We break down the complex walls of hedge funds into easily digestible nuggets of information.

Introduction to hedge funds

Join Emma Cory, our Alternatives Specialist, and Julian Romero, Head of Institutional Portfolio Management, as they explore the Hedge Funds asset class. Gain new insights for your investment strategy as our experts guide you through what Hedge Funds are, how they work, and why they could be a valuable addition to your investment portfolio.