Joining a long list of firms rolling out absolute return products placed inside the pan-European UCITS III fund structure, HSBC Global Asset Management has launched the HSBC GIF GEM Equity Alpha Fund.

The fund offers daily liquidity and is designed to offer annual returns of 10 to 15 per cent based on a volatility of around 10 per cent with what the bank says is limited correlation to markets.

A number of investment firms and wealth managers have launched UCITS III products in recent months. This type of fund wrapper permits a manager to use derivatives to take short as well as long positions in markets to generate an absolute return and they typically provide higher levels of transparency and liquidity than is the case with a conventional hedge fund product. However, these funds are not without their own risks and should be carefully scrutinised, according to the results of a recent survey by Alternative Decisions, a European consultancy.

The HSBC fund will be jointly managed by Omar Negyal and Nick Timberlake. The duo will monitor a universe of around 700 stocks as part of their remit, chosen from across the MSCI Emerging Markets and MSCI Frontier Markets nations. In total, they will run about 35 long and 35 short stock positions.

The fund forms part of HSBC Global Asset Management’s Luxembourg-domiciled Global Investment Funds range. The minimum investment in the HSBC GIF GEM Equity Alpha Fund is $5,000 for the retail share class and $1 million for institutional share class. There is a performance fee of 20 per cent.