HSBC Asset Management (HSBC AM) has rolled out a sub-fund that invests in short-duration bonds focused on US crossover opportunities, with the flexibility to invest globally, and on material environmental, social and governance (ESG) improvements against its reference benchmark.

The HSBC Global Investment Funds (HGIF) - ESG Short Duration Credit Bond Sub-Fund is being offered to HSBC’s retail and private banking customers in Singapore until September 30. The product is registered as a recognized scheme in Singapore.

The sub-fund is designed to capture positive characteristics relative to the investment universe based on HSBC’s proprietary ESG and Lower Carbon Criteria.

Patrice Conxicoeur, chief executive officer and head of Southeast Asia, HSBC AM (Singapore), comments: “Amid market volatility, it has become even more critical for investors to approach sustainable investing as part of their long-term strategy. Companies that manage their ESG risks and create value for stakeholders – employees, customers, suppliers, the environment, and wider society – are more likely to survive through cycles and thrive in the long term.”

In the current environment of heightened market and economic uncertainties, shorter-duration bond funds are compelling as they may carry less risk than those with longer duration, HSBC AM says. They are less sensitive to interest rate movements and may have lower price volatility through the “pull-to-par” effect.

The US crossover bond space, covering corporate bonds rated between low BBB and high BB that sit at the intersection of the investment-grade and high-yield markets, is a large and diversified segment that is close to US$1.7 trillion in market size.  HSBC AM sees compelling risk-adjusted returns for crossover bonds as investors can find opportunities due to price distortions or forced selling in the market.

The minimum subscription sum for the sub-fund is S$1,000 (US$740). The base currency is US dollar, but SGD, AUD, EUR, and GBP hedged classes are also available to investors.