Winners rationale

HSBC GPB’s alternative advisory business benefited from record inflows of US$1.9 billion in Asia in 2021, as robust client interest prompted a more than doubling in capital committed by regional clients to private markets compared with the previous year.

Those flows included a strong contribution from those that were new to the asset class, highlighting HSBC GPB’s success in converting clients to alternative investments for the first time.

That success can in part be attributed to the breadth, quality and performance of HSBC GPB’s alternative platform in the region. More than half of the hedge funds and private markets funds offered to clients during the period under consideration were exclusive to HSBC GPB clients. Four of the 10 largest private equity (PE) players are present on the bank’s alternatives platform, with key launches during 2021 including a flagship North America buyout fund, a diversified portfolio of secondary PE investments and direct co-investments, a healthcare-focused private credit fund, and a US-focused semi-liquid private credit fund.

Specifically, China-focused hedge funds offered by the bank demonstrated strong outperformance versus the major Chinese stock indices during the judging period, a feat all the more impressive considering that 2021 was a year marked by market turbulence sparked by a regulatory crackdown on the technology and sector and a violent sell-off in high-yield bonds.

That outperformance can be at least in part attributed to the rigorous due diligence and selection process HSBC GPB conducts on all hedge funds included on its high conviction list. Out of an initial universe of 7,000 funds, the bank whittles down prospective strategies based on quantitative and qualitative screening and due diligence to a final list of over 30 hedge fund managers in Asia.

HSBC GPB has excelled in maintaining close communications with clients during times of market volatility over the last 12 months, made timely recommendations to clients to switch out of high-beta holdings into low-volatility hedge funds to minimise the impact on their portfolios.

Looking at HSBC GPB’s broader alternatives offering, the bank’s high-conviction hedge funds on average experienced smaller drawdowns during sell-offs than both the MSCI World Stock Index and the HFRI Fund Weighted Composite Index of hedge funds, and with a higher Sharpe ratio.

HSBC Global Private Banking is Asian Private Banker’s Best Private Bank – Alternative Advisory for 2021.