HSBC launches new US Treasury fund on island
HSBC Global Asset Management (Bermuda) Ltd has launched a new offshore US Treasury Fund, domiciled on the island.
The fund is aimed at meeting rising demand from institutional investors from the Bermudian insurance, reinsurance, captive and insurance-linked securities market.
Interest rates in the US are climbing after a series of hikes by the US Federal Reserve. The Fed’s target rate has climbed from 0 to 0.25 per cent in December 2015 to 1.75 to 2 per cent today.
Faith Outerbridge, head of HSBC Global Asset Management (Bermuda), said: “We have seen appetite for an offshore US dollar Treasury fund grow among our Bermudian-based clients and are proud Bermuda has become the impetus to launch this fund solution to HSBC clients globally.”
HSBC said the aim is to provide investors with security of capital and daily liquidity, together with an investment return which is comparable to normal, short-dated US Dollar denominated US Treasury returns.
The US Treasury Fund seeks to achieve this through investing in a mix of short-term debt, including Treasury bills, bonds, and Repo.
“Our investment process combines a structured, methodical and globally consistent approach including a distinctive credit, liquidity and interest rate risk approval and limit setting process, adhering to global governance standards, whilst taking into account local market dynamics,” Ms Outerbridge said.
Leveraging the global reach of HSBC, the US Treasury Fund will offer additional scale to investors by investing directly into a master HSBC Global Treasury Liquidity Fund.
Mark Watkinson, CEO of HSBC Bank Bermuda, said: “The launch of the new US Treasury Fund speaks to HSBC’s global breadth of capabilities and network our clients can rely on.
“We have been working closely with our colleagues in Europe as well as the US to continue to offer the best solutions possible in an ever-changing regulatory environment. This fund is evidence of the benefits of an asset management product, the US Treasury Fund, linking directly to the banking systems by offering the convenience of a sweep facility for our institutional clients.”
HSBC said the US Treasury Fund was yielding 1.91 per cent gross at the time of its announcement today. The net return to shareholders will depend upon the share class chosen.
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