Charles Robinson, HSBC Global Asset Management, discusses investment philosophy, investor appetite for hedge funds and his views of Ucits products as well as emerging Asian managers and investors.

HSBC Global Asset Management, the hedge fund arm of the bank, has an “eclectic range of strategies,” said Robinson. These range from global currencies through the whole gamut to global equity long/short. While there is no one definitive strategy, there are “common denominators. Most importantly everything we do is anchored in valuations,” Robinson added. HSBC “gravitates” to managers that general alpha and generally prefer non-directional, market neutral strategies.

On investor appetite, Robinson has seen a change since the financial crisis. He says interest in hedge funds has “picked up measurably” and “changed for the better”.

“Investors only begin conversations after they are satisfied about risk, legal, compliance and operations. Only once you have passed the ‘sniff test’, will they be interested in talking about the strategy. This is a complete opposite to pre-crisis,” noted Robinson.

He confirmed the interest HSBC has in Ucits products. “We are a passionate believers in and early pioneers in Ucits III hedge funds,” he declared. He believes the Ucits III framework lends itself to some strategies and if they fit, it is a good way to open new doors to previously closed markets, such as Germany, “a no-fly zone” for most Cayman-based funds.

Robinson is seeing a “real pick-up” for Ucits products in Asia, including Japan, where the motivations are not regulatory pressure by liquidity and the transparency of the products.

HSBC has plans to expand in Asia, too, confirmed Robinson, although he refused to be drawn on what these might be. “We have a few more tricks up our sleeves,” he said.

“Asia, as one would expect, is in the DNA of the Hong Kong and Shanghai Banking Corporation,” said Robinson. “We care passionately about it.”

He noted with some surprise that Asia remains on the periphery of the hedge fund industry with the vast majority of strategies and managers focused on North America and global with Asia, even including Japan, accounting for only 5% of the industry. “There is clear investor demand. Obviously we should see a lot more growth from that timezone,” he concludes.

He believes it is “mission critical” to be on the ground in Asia. Investors want to “know you have boots on the ground, corporate access and, equally important, robust infrastructure supporting local business,” he noted.

Robinson also discussed future investor allocation to hedge funds, the future of the industry and the impact of regulation on the industry as well as offshore/onshore fund structures and the qualities HSBC looks for in a manager.

An in-depth interview with Bill Maldonado, head of alternative investments, and Charles Robinson both of HSBC Global Asset Management, will appear in the August edition of Hedge Funds Review.