The hard-close of the fund is to take effect from 10 May 2017.

HSBC Global Asset Management will hard-close its Asia Ex-Japan Equity Smaller Companies Fund to new subscriptions from all investors. This will take effect from 10 May 2017.

The move is a result of significant investor interest on the back of a strong performance, which has helped the fund reach assets under management of $1.3 billion. HSBC has capped the size of the fund to ensure that the best interests of existing investors are protected, the bank said in a statement late last week.

The fund, which is co-managed by Elina Fung and Alex Kwan, primarily invests in companies in the bottom 25 per cent by market capitalisation of the Asia ex-Japan sector. This currently means companies with a market cap of $4 billion or below.

The measure is temporary and can be reversed if the AuM falls below the stated hard close threshold. HSBC said that the Asia small-cap market has had periods of volatility over the past five years, which creates challenging liquidity issues.

“As liquidity is generally much lower for companies in the small cap universe compared to the overall market, investment opportunities can become more limited as subscriptions to the fund increase,” said Stephen Kam, senior product specialist, Asian equities. “We have seen great investor interest in the fund on the back of strong performance and therefore have capped the size of the fund to ensure we protect the interests of our existing investors. The decision also allows our investment team to continue to invest in similar opportunities that have helped generate the strong returns seen in the past."