HSFAX — HSBC Frontier Market Fund

HSFAX Fund Overview

HSFAX — HSBC Frontier Market Fund is a US mutual fund managed by Hsbc Funds, categorised as Commodity. ABC INVEST provides holdings, performance, costs, cashflows, risk data, prospectus documents and SEC filings, sourced from SEC filings.

• Type: US mutual fund
• Manager: Hsbc Funds
• Category: Commodity
• Assets under management: $7.32M
• Ticker: HSFAX
• SEC CIK: 0000798290
• SEC series ID: S000033240
• Share class ID: C000102226

HSFAX Investment Objective and Strategy

HSBC Frontier Market Fund describes its objective and strategy as follows, from its latest prospectus filed with the SEC by Hsbc Funds.

Investment objective

The investment objective of the HSBC Frontier Markets Fund (the Fund) is long-term capital appreciation.

Principal investment strategy

Under normal market conditions, the Fund invests at least 80% of its net assets, plus any borrowings for investment purposes, in issuers located in frontier market countries. The term frontier market countries encompasses those countries that are at an earlier stage of economic, political or financial development, even by emerging markets standards. For purposes of the Funds investments, frontier market companies are those: (i) whose principal securities trading markets are in frontier market countries; (ii) that derive a significant percentage of their total revenue or profit from either goods or services produced or sales made in frontier market countries; (iii) that have a significant percentage of their assets in frontier market countries; (iv) that are linked to currencies of frontier market countries; or (v) that are organized under the laws of, or with principal offices in, frontier market countries.

HSBC Global Asset Management (UK) Limited is the Funds subadviser (AMEU or the Subadviser). The Subadvisers Frontier Markets Team has identified a group of more than 30 countries that it currently considers to be frontier market countries. This includes countries that, as of December 29, 2017, are part of the Morgan Stanley Capital International (MSCI) Frontier Market Index classification (currently 29 countriesArgentina, Bahrain, Bangladesh, Benin, Burkina Faso, Croatia, Estonia, Guinea-Bissau, Ivory Coast, Jordan, Kazakhstan, Kenya, Kuwait, Lebanon, Lithuania, Mali, Mauritius, Morocco, Niger, Nigeria, Oman, Romania, Senegal, Serbia, Slovenia, Sri Lanka, Togo, Tunisia and Vietnam), as well as the MSCI Emerging Market Index countries considered by the Subadviser to be cross-over countries (currently seven countriesColombia, Egypt, Pakistan, Peru, Philippines, Qatar and United Arab Emirates).

Cross-over countries are those that are formally included in main emerging markets indices but are deemed by the Subadviser to show frontier markets characteristics. Specifically, a cross-over country must have an MSCI Market Accessibility rating of improvements needed or improvements possible in any one of the following categories: (i) openness to foreign investors, (ii) ease of capital flows, or (iii) efficiency of operational framework. Additionally, these countries individually must comprise less than or equal to 1.0% in the MSCI Emerging Markets Index at the time of purchase. The Subadviser also may, in the future, deem other countries to be cross-over market countries. The Subadviser will also invest in a number of additional countries that it deems to be frontier market countries but not currently part of the above mentioned indices (for example Georgia, Ghana, Cambodia, Saudi Arabia and Zimbabwe, among others).

The Subadviser may, in the future, deem other countries to be frontier market countries. The Subadviser has broad discretion to identify countries that it considers to qualify as frontier markets. The Fund invests primarily in the equity securities of frontier market companies with market capitalizations above $100 million. However, the Fund may invest in companies of any size. The Fund treats common stocks and other securities with equity characteristics as equity securities, including, but not limited to, depositary receipts, preferred stock, warrants, rights, trust certificates, limited partnership interests and equity participations. The Fund is exposed to commodity (such as oil) producing countries through its investments in frontier market countries. In light of the fact that a relatively significant proportion of frontier market companies available for investment are in the financial services group of industries, the Fund will, under normal market conditions, invest more than 25% of its total assets in issuers that are in the financial services group of industries.

For purposes of the Funds investments, the financial services group of industries includes, among other things, banks, asset management companies, investment banking companies, brokerage companies, custody banks and insurance companies. The Subadviser intends to maintain the Funds exposure to issuers in the financial services group of industries such that it is broadly in line with the proportion of frontier markets issuers that are available for investment and in the financial services group of industries. The Fund is permitted to use derivatives to manage market exposure and currency positioning, and also to achieve investment objectives. The Fund may also use equity index futures for cash management purposes and forward foreign currency exchange contracts and non-deliverable forwards to hedge certain of its exposures to non-U.S.

currencies. For purposes of meeting its 80% investment policy, the Fund may include derivatives that have characteristics or exposures similar to issuers located in frontier market countries. The Funds use of derivatives will vary depending on market conditions and the ability of the Fund to invest directly in securities providing the desired exposure, but derivatives are expected normally to comprise a minority of the Funds investments. Additionally, the Fund may seek to achieve its investment objective in part by investing in participatory, unitary and other structured notes, which are equity access products that create synthetic equity exposures to issuers in markets where the Fund is restricted from directly purchasing securities. The Subadviser selects investments for purchase and sale through an in-depth stock analysis that combines quantitative and qualitative analysis.

The Subadvisers quantitative analysis is based predominantly on publicly available data and is focused on valuation metrics, earnings growth expectations and return on capital and profitability. The Subadvisers qualitative analysis is based on an individual assessment of business model and competitive advantage, cash generation, industry dynamics and corporate governance and management quality.

HSFAX Costs and Fees

HSFAX costs about $185 per $10,000 invested per year in fund expenses.

• Net expense ratio: 1.85%
• Gross expense ratio: 7.92%
• Portfolio turnover: 55%
• Brokerage commissions: 29.56 bps of average net assets (SEC N-CEN)

HSFAX Cashflows

Over the 12 months to 2020-01, HSBC Frontier Market Fund had net inflows of $2.39M, from monthly SEC N-PORT filings.

HSFAX Debt Constituents

No individual debt constituents are reported in HSBC Frontier Market Fund's latest SEC N-PORT filing.

HSFAX Prospectus and SEC Filings

Official HSBC Frontier Market Fund filings on SEC EDGAR — prospectus, portfolio holdings and annual reports.

• Prospectus (485BPOS) — filed 2020-03-12
• Prospectus (485BPOS) — filed 2019-03-15
• Prospectus supplement (497) — filed 2019-06-07
• Portfolio holdings (N-PORT) — filed 2020-03-19
• Portfolio holdings (N-PORT) — filed 2019-12-27
• Annual census (N-CEN) — filed 2020-01-14
• Annual census (N-CEN) — filed 2019-01-11

Related Funds

Other Commodity funds tracked on ABC INVEST:

• VanEck Vectors Gold Miners ETF (GDX)
• VanEck Vectors Junior Gold Miners ETF (GDXJ)
• Invesco Optimum Yield Diversified Commodity Strategy No K-1 ETF (PDBC)
• PIMCO CommoditiesPLUS Strategy Fund (PCLAX)
• First Eagle Gold Fund (SGGDX)

Data Sources

ABC INVEST compiles this page from public filings made to the U.S. Securities and Exchange Commission (SEC) through EDGAR: portfolio holdings and monthly cashflows from Form N-PORT, expenses and returns from fund prospectuses (Form 485BPOS) and the SEC DERA Risk/Return Summary data sets, annual data from Form N-CEN, and shareholder reports from Form N-CSR.