Best Private Bank – Alternative Advisory
HSBC Private Banking
In particular, we saw increased deployment of capital across the private markets investing spectrum and we expect this trend to continue as opportunities for suitable clients to capture illiquidity premiums over public markets gain traction. As we adapt to new ways of working, we are thankful to our valued clients for their ongoing trust and we remain ever focused and resolute in our mission to provide best in class products and services, making the most of HSBC Group’s alternative investments and asset management strengths.
This was possible because of HSBC securing exclusivity for more than half of newly launched and focus-list private market funds and hedge funds in 2020. HSBC’s eminent position and wide network in Hong Kong, one of the world’s largest wealth hubs, and an ever increasing retail and distribution presence in mainland China likely helped.
Since 2008, HSBC Private Banking’s core hedge fund portfolio has delivered a 6.35% out-performance to the benchmark index, with an impressive Sharpe Ratio. This was as the bank created and delivered exclusive and bespoke solutions that featured downside risk protection, while delivering consistent income (yield) and clear outperformance in market dislocations, particularly in early 2020.
In 2020, HSBC launched 12 private market funds and hedge funds with five high-conviction ideas in US private REITs; global tech-related private equity; private real estate; COVID-19 driven private dislocation and special situation credit opportunities; and social impact investing private equity.
Through the market turbulence, HSBC offered a proprietary cash-flow planning model forecasting future cash flow on the client’s private markets portfolio, a particularly useful tool to have when market drawdowns weigh on client liquidity. The bank created a hedge-fund portfolio construction model as well, to help develop a customised hedge fund solution based on the client’s risk appetite.
HSBC gave virtual webinars via Zoom to provide the latest market updates to clients when social distancing policies were in force during the pandemic. It sent out emails with factsheets on quarterly updates of private market funds.
All the while, HSBC implemented exposure limits on the asset classes such as real estate, private equity and alternatives, and launched a new framework for private credit funds to determine the risk rating of products. It advised clients to switch hedge funds, recommending clients to switch high-beta holdings to low beta, low volatility hedge funds — which showcased its capabilities in downside protection, especially in March 2020.
For their ability to provide early and exclusive access to high-performing funds in alternatives that helped clients earn an income in a low-yield environment, while reducing the risks from liquidity squeezes and drawdowns, HSBC Private Banking wins Asian Private Banker’s Best Private Bank — Alternative Advisory award for 2020.