HSBC Global Asset Management has launched a fund that invests in a diversified portfolio of sovereign inflation-linked bonds issued by OECD countries such as Australia, Canada, Sweden, the UK, the US, Japan and some countries in the eurozone.  

The fund follows a quantitative management approach. It is managed by HSBC GAM’s quantitative-based fixed income team, which launched its first ILB fund in 2000 and had more than $2.7 billion in ILB assets at end June 2010.

To reach a broader investor base, the global ILB strategy has been launched through a Luxembourg-based SICAV within HSBC’s flagship Global Investment Funds range.

HSBC believes that future inflation is a concern.  Accommodating monetary policies, combined with significant public deficits in developed economies, may lead to higher realised inflation in the next three to five years, the firm believes. In the short term, inflation pressure is likely to derive from emerging countries' strong economic growth, demand for commodities and currency appreciation.

The fund seeks to add value primarily through country allocation and is hedged against currency risk. Minimum investment is $1 million for institutional investors and $5,000 for retail investors, with annual management fees of 0.35 and 0.70 per cent respectively.