What are money market funds?

HSBC Global Liquidity Funds are pooled money market funds that invest in high quality short term money market instruments. They are Triple A rated and are actively managed within rigid and transparent guidelines to offer safety of principle, same day liquidity and instant counterparty diversification.

Our HSBC Global Liquidity Funds are domiciled in Ireland.

The sub funds of the HSBC Global Liquidity Funds are not managed to a benchmark, however the fund aims to provide a return which is comparable to normal money market interest rates. Performance of the fund is reported against a reference rate which is purely for comparison and not a target for return. Historically the reference rates used were short-term LIBID rates, for example 7-day LIBID. However, in March 2020 and ahead of the demise of LIBOR, we updated the Fund’s documentation, fact sheets and other related materials to reflect the relevant overnight Risk Free Rates for each of the sub-funds.

The funds have a Triple A rating from Standard & Poor’s (AAAm) and Moodys’ (Aaa-mf). This is the highest rating that can be assigned to a product of this type and means that the sub funds are considered to offer the highest level of capital security and lowest level of interest rate sensitivity. An in-depth rating review is conducted annually, supplemented by ongoing monitoring and regular detailed reporting to the rating agency.

The evaluation of credit risk involves a number of different factors, including the credit quality of individual holdings, their maturity and the diversification of fund holdings. Taking these three factors into consideration, fund managers can construct portfolios to aim to preserve capital, protect income, and satisfy the strict criteria necessary to qualify for triple-A rating.

The primary objectives of the funds are to preserve capital and provide access to liquidity. Whilst there is not a target yield, they are typically competitive with short-term money market interest rates.

The funds are not guaranteed and under EU regulations they cannot be supported by their sponsor. All investment products carry some risk, however strict guidelines and investment parameters are in place to offer investors the high levels of security and to ensure the fund meets the principal objectives of capital preservation and liquidity. The funds are inherently conservative and the risk of any single credit event is spread widely and concentration risk to any individual issuer is generally capped.

IMMFA members are bound by a set of Principles of Best Practice, the objective of which is to protect investors by requiring high and consistent standards for IMMFA funds.