HSBC GIF CIVETS fund

HSBC Global Asset Management has launched the first CIVETS fund available to UK investors.

The fund will invest in a portfolio of between 40 and 60 stocks listed in Columbia, Indonesia, Vietnam, Egypt, Turkey and South Africa.

The Luxembourg-domiciled SICAV will be managed by Nick Timberlake, global head of emerging market equities, while Douglas Helfer – who currently manages HSBC’s offshore Russia fund – will have responsibility for country allocation.

Minimum investment:
$5,000 (£3,051)

Annual management fee:
1.75 per cent

Initial charge:
Up to 5.54 per cent

Contact:
www.assetmanagement.hsbc.com

Simon Brett, head of investment at Parmenion Fund Research, says:  

The term BRIC (Brazil, Russia, India and China) is now a well-established investment acronym.

CIVETS may become another well-known investment term with the launch of the HSBC CIVETS fund. The initials stand for Columbia, Indonesia, Vietnam, Egypt, Turkey and South Africa.

At first glance there seems little to connect the countries apart from they are all emerging markets.

However, upon closer analysis, they all have young populations and diversified economies and unlike some countries of the EU, do not have sovereign debt problems.

Together they represent an interesting investment proposition. For example, Columbia has oil but is investing its petrodollars in its infrastructure.

Turkey’s economy is already the sixth largest in Europe and is becoming a bridge between Europe in the West and the Middle East.

Both Vietnam and Indonesia are benefiting from manufacturing activities moving from China. However there are a couple of caveats. First, politics plays a big role in the lives of some of the above countries.

Vietnam is still a communist country and recent events in Egypt are a reminder that politics can change rapidly. Second, the Luxembourg fund is denominated in dollars and so there is a currency risk for a sterling investor.

Finally, the fund is likely to be more volatile than a plain vanilla emerging markets owing to its concentration on six countries, albeit the fund managers do have the option to invest 25 per cent of the fund in other emerging markets. Overall, a welcome addition for the more adventurous investor.

Overall rating:
3 out of 5