HSBC Global Asset Management is launching a global currency fund aimed at institutional investors, including private banks, in a bid to exploit currency market inefficiencies and high market volatility.

“Amid challenging market conditions, it is important to offer clients viable investment solutions that could deliver consistent positive returns. Therefore, HSBC is offering this proven robust investment process externally to institutions via a UCITS III fund,” said Barbara Rupf Bee, global head of institutional sales at HSBC Global Asset Management.

The fund, to be called the HSBC GIF Global Currency Fund, invests in a global basket of currencies and targets returns in excess of Libor. Daily liquidity is offered via a Luxembourg-based US Dollar denominated UCITS III fund, with hedged share classes available in s terling, euro, yen and Swiss franc. Minimum investment for the institutional share class is $1 million.

The fund is managed by the HSBC Integrated Model Trading team. The team has operated a similar foreign exchange strategy for HSBC since 2004. Bill Maldonado, head of alternative investments at Halbis, the active management specialist within HSBC Global Asset Management, said the fund introduces a systematically managed multi-strategy approach with a discretionary overlay, with a view to directing allocations to those sub-strategies providing the best returns.

He said the fund thereby could meet market demands from investors switching from single strategy funds to a more wide-ranging vehicle that can switch between strategies with different investment styles.

The sub-strategies are designed to generate returns in different market conditions, and the fund performance will therefore not be dependent on a market environment in favour of, for example, the traditional carry trade - the practice of borrowing in low-yielding currencies and buying higher-yielding ones to benefit from the risk premium.

HSBC Global Asset Management manages assets of $375.04 billion, as at 31 January 2009.