The fund will be domiciled in Luxembourg and is expected to launch in Hong Kong. It will have a 1.5% annual management fee and be distributed in US dollar and Hong Kong dollar share classes.
“In today’s low interest rate environment, investors are seeking avenues beyond cash to fulfill their income requirements,” said Angus Parker, manager of the fund and head of developed equities at HSBC Global Asset Management.
“Dividends are not only a key component of an investor’s total return, but can also be an important source of cash flow. Dividend growth also has the potential to exceed inflation.”
The firm believes global equities in the medium-term will perform well and many listed companies are not overvalued despite the run up in key markets. With central banks providing liquidity in major markets and consistently low oil prices, global economic recovery appears to be on track, the firm said.
However, short-term volatility is likely, driven by geopolitical concerns such as the Greek debt situation and the expected tightening of US monetary policy.
The fund intends to invest in a diversified portfolio of equities across cyclical and defensive sectors and across developed and emerging markets. North America will account for the largest regional allocation (57%), followed emerging markets (17%), according to the fund’s indicative portfolio in its factsheet.
Consumer discretionary, financials and consumer staples together are expected to account for nearly half the sector allocation.
HSBC GAM is also seeking regulatory approval to offer its two onshore China funds in Hong Kong under the Mutual Recognition of Funds initiative, which started July 1, FSA reported earlier.
Earlier this year, the company unveiled a volatility-focused equity product that aims to protect investors from market volatility through volatility optimisation.