x Abu Dhabi, UAE Friday 21 July 2017

HSBC opens first fund for CIVETS firms

HSBC GIF CIVETS aims to deliver a combination of capital growth and income by investing in its portfolio of companies culled from the stock exchanges of Columbia, Indonesia, Vietnam, Egypt, Turkey and South Africa.

No sooner has an investment trend been recognised, then the fund-management industry rushes to service it.

On Tuesday, HSBC Global Asset Management announced it was launching the world's first CIVETS fund, a Luxembourg-domiciled fund available to private investors.

HSBC GIF CIVETS aims to deliver a combination of capital growth and income by investing in its portfolio of companies culled from the stock exchanges of Columbia, Indonesia, Vietnam, Egypt, Turkey and South Africa.

With 580 million people, the CIVETS represent about 8 per cent of the world's population and boast an attractively youthful demographic, with an average age of just 27 years, says Sridhar Chandrasekharan, the global head of wholesale at HSBC.

"The countries also boast diverse and dynamic economies and, unlike some emerging countries, they aren't too heavily dependent on external demand or commodity exports. They also have relatively low levels of public, corporate and household debt."

HSBC's CIVETS fund will hold a relatively concentrated portfolio of between 40 and 60 stocks, and the management will be split among four of the bank's global investment specialists.

It will be denominated in dollars and have an annual management fee of 1.75 per cent, at the higher end of the scale for an investment fund. Private investors can invest in the fund with a minimum of US$5,000 (Dh18,369).

The fund will also be free to roam beyond the CIVETS and will invest in other emerging countries with similarly attractive demographics, such as Mexico, Nigeria, the Philippines, Thailand, Malaysia and Saudi Arabia.

If you're tempted, make sure you understand the risks involved in investing in emerging countries, especially while the global recovery remains shaky. This should be considered a high-risk investment. Don't put too much of your portfolio in the CIVETS, but balance your holdings across different countries, regions and markets.