Hsbc's russian equity fund

HSBC investing’s latest launch, the GIF Soviet Union Equity Fund, is a subfund of HSBC’s flagship Luxembourg-based Global Investment Funds (GIF) SICAV range. This new add-on is managed by Halbis, the active agent management specializer team of the HSBC Group, and the lead director is Stephen A. Douglas Helfer, who has a 10-year track record in managing Russian equities. The lower limit investment sum is US$5,000.

HSBC tells Expat Investor how the Fund is benchmarked against the customised MSCI Soviet Union 10/40 Index, and is managed in a similar way to that of a Russian equity fund also managed by Helfer and sold to clients in Japan. That fund was launched on 30 March, 2007 and has raised approximately US$300m to date.

This new Soviet Union Equity fund holds a concentrated portfolio of 20- 30 stocks, which could include locally-listed Russian equities, American Depository reception (ADRs) and Global Depository reception (GDRs). The bulk of plus are invested in large liquid blue chip stocks though up to a third of the portfolio could be invested in mid cap companies. Mr Helfer constructs the portfolio through bottom-up stock pick and takes an unconstrained approach to sector allocation.

He says Russian equities offer compelling investment chance. Russia has a large economic system that is entrance its eighth year of rapid growing. Although the economic system was ab initio driven by trade goods exports, growing is now being fuelled by domestic help consumption and investing.

“Over the past few years, Russian stocks have delivered a good tax return. However, contempt their rapid rise, Russian equities still remain attractively valued and amongst the cheapest of the emerging markets.

“Russian equities are trading on a 2008 consensus price net income ratio of 10.5 times, compared to the broader global emerging markets existence of 13 times. At the same time, corporate profits continue to grow at a fast pace, peculiarly in the consumer and finance sectors, where growth is more than 30%. The presidential elections... Should act as a catalyst to strong growth”

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