HSBC International has structured a transferable fund that offers exposure to China. The firm has bought zero-coupon bonds and a so-called Napoleon option for the five-year 'China Bonus Fund', based in Dublin. The firm has purchased an option, which pays an annual coupon of 8%, plus the lowest monthly performance of the FTSE/Xinhua China 25. It has also purchased zero-coupon bonds to provide a capital guarantee at maturity.
"We're aiming to make the fund UCITS III compliant," noted Herman Wessel, senior product manager in global funds and insurance in Jersey, Channel Islands. The fund already comes within the first undertaking for collective investment in transferable securities guidelines, but Wessel added UCITS III would further aid distribution of the fund. The China Bonus Fund is sold offshore globally, except in the U.K.
