Key Morningstar Metrics for HSBC Global Strategy Conservative Portfolio
- : GoldMorningstar Medalist Rating
- : Above AverageProcess Pillar
- : Above AveragePeople Pillar
- : AverageParent Pillar
We have commenced analyst coverage of the HSBC Global Strategy range with Above Average ratings for People and Process. The strategy is managed by a dedicated UK management team working as part of a wider, global multi-asset platform, and applying a disciplined and well-formalized investment process.
The range provides low-cost multi-asset exposure at five distinct risk levels. The investment process combines long-term strategic asset allocation with an active adjustment element intended to exploit shorter-term market inefficiencies. The portfolio allocates to equities and bonds using HSBC index funds, exchange-traded funds, and derivatives for low-cost exposure to global markets.
HSBC Global Strategy Conservative is the second-lowest-risk fund in the range and targets annualized volatility of 5%-8%. Its peer group is the GBP allocation 20%-40% equity Morningstar Category.
The lack of UK home bias and the global market weighting approach mean higher US exposure than the category average. Along with its low costs, this has provided an overall performance tailwind over the strategy’s life, although it has still fared well compared with peers when other regions have been more in favor. Beta has been higher than the category average, with upside-and downside-capture ratios typically greater than peers. Long-term performance has been strong compared with the category average and category index, in both absolute and risk-adjusted terms.
The long-term allocation is the key driver of performance, although there is also some evidence that tactical adjustments have added value since they became more formalized in 2020. We like the fact that these active decisions draw on a consistent, evidence-based framework and are managed within a defined active risk budget.
A dedicated UK management team benefits from HSBC Asset Management’s 70-plus-member global multi-asset platform, using the same investment process and shared insights. Lead manager Nicholas McLoughlin took responsibility for the strategy in December 2023, having joined it as a named manager in 2020. While his public portfolio management track record is still limited, he is an experienced multi-asset investor whose role in leading the firm’s multi-asset research function aligns well with the collaborative investment approach. McLoughlin is directly supported by two portfolio managers and three analysts.
HSBC Global Strategy Conservative Portfolio: Performance Highlights
From its inception in 2017, the fund has comfortably outperformed its category index and its average category peer on an absolute and risk-adjusted basis. This is thanks to its long-term allocation and its low-cost capture of market exposure, while active decisions have also at times added value relative to its own long-term strategic allocation. Beta has been higher than the category average, with upside- and downside-capture ratios typically greater than peers.
Since Nicholas McLoughlin became a named manager on the fund in July 2020 through July 2026, the C share class beat both the category index and the category average by an annualized 1.2%, which it achieved with a higher Sharpe ratio despite slightly higher risk.
To date, the fund has beaten the category average in every calendar year with the exception of 2022. The underperformance of peers in that year stemmed mainly from long-term allocation differences, such as a larger bias to government bonds and less cash and credit, plus less UK equity and more US equity than the category average. Over the long term, the higher US equity weighting relative to peers has been an advantage.
