HSBC unveils UK Freestyle offering

A subfund of the HSBC Specialist Investment Funds Oeic, the fund’s mandate ignores the traditional method of benchmarking against an index. It is simply geared towards providing long-term capital growth through investing in a focused portfolio of predominantly British stocks.

Fund manager Bob Morris says stockmarkets ultimately value companies based on fundamentals, and he will invest in firms that trade for less than their cashflow return valuations. Morris adds that management of downside risk is also an important factor in managing the portfolio.

The aim is to hold between 25 and 30 stocks, allowing up to 10% of the portfolio to be in one company’s shares. The intention is for the fund to be fully invested with a bias to large and mid-cap companies, and not to hold strategic cash positions.

The fund’s mandate allows Morris (pictured) flexibility in choosing sector and stock weightings, as there is no reference to performance relative to any index.

The portfolio mirrors the style of the $390m (£209m) HSBC Asia Freestyle fund, launched in April 2004. Managed by Ayaz Ebrahim in Hong Kong, the Asian fund invests in a concentrated portfolio of Asian equities. However, it currently holds 10.4% of its assets in cash and money market instruments.

Morris is to be a member of the company’s new specialist “alpha” business, HSBC Halbis Partners. He also manages HSBC’s Growth and Income fund and the offshore AMIF UK Equity Opportunities fund.

According to HSBC head of distribution Geoff Cheetham, there is a demand from investors for funds to deliver above-benchmark returns. He explains that the Freestyle portfolio can complement investors’ current UK equity investments and achieve a risk/return profile less correlated with the market.

The UK Freestyle fund has an initial charge of 4% and an annual management charge of 1.5%. Its minimum lump sum investment is £1,000 or monthly contributions of £50. The portfolio is available for Isa and Pep investors.