Understand your KID more easily in 2023

The KID¹ – A new information document that’s easier to read

The purpose of the PRIIPs² Regulation, applicable as of 1 January 2023, is to switch from the KID (UCITS Regulation) to the KID (PRIIPs Regulation). The KID is a clearer, easier to read regulatory document that will help retail investors compare different financial products more easily

¹KID: Key Information Document

²PRIIPs: The name of the regulation applicable as of 1 January 2023 Packaged Retail and Insurance-based Investment Products

The 4 main changes

The document has a new name and is now called the KID

The risk and performance indicator has a new calculation method. The Synthetic Risk and Reward Indicator (SRI) that you are familiar with is changing in the KID to the Summary Risk Indicator (SRI). The volatility bands are wider when calculating the SRI. Your fund itself remains the same. Only the calculation method is changing, which may result in a lower indicator.

Fees are presented in detail. More figures, more lines... Fees are not increasing but they will be presented in greater detail so that you can better understand what you are paying.

Past performance is no longer presented. Previously, a graph provided information on the fund’s performance over the last 10 years. Now, we’ll be using a forward-looking approach with four scenarios that indicate the fund’s expected performance in Stress, Unfavourable, Moderate and Favourable markets. Past performance data will remain available on HSBC Asset Management’s fund centre.

Q&A

Is my investment vehicle (Fund/mutual fund/company mutual fund) changing on 1 January 2023?

Your investment vehicle will not change at all when this new regulation is applied. Only the way certain information is presented, such as fees and performance, and the way the summary risk indicator is calculated will change.

Risk indicator

Why is the risk indicator lower if the fund’s structure is not changing?

The SRI (Summary Risk Indicator) uses a new calculation method. The risk associated with your fund hasn’t changed with the new regulation, only the calculation method. Volatility is now calculated using wider bands for each risk level.

Example – HSBC GIF Global Equity Climate Change

2022 KID

Risk and Reward Profile

The risk and reward indicator is based on historical data and my not be a reliable indication of the future risk profile of the Fund.

The risk and reward category shown is not guaranteed to remain unchanged and may shift over time. The lowest category does not mean a risk-free investment.

Why is this Fund in this specific category?

This Fund is classified in category 6 because its price or simulated data has shown high fluctuations historically.

Material risks not fully captured by the Risk and Reward Indicator:

• Counterparty Risk The possibility that the counterparty to a transaction may be unmilling or unable to meet its obligations.
• Derivatives Risk Derivatives can behave unexpectedly. The pricing and volatility of many derivates may diverge from strictly reflecting the pricing or volatility of their underlying reference(s), instrument or asset.
• Exchange Rate Risk Changes in currency exchange rates could reduce or increase investment gains or investment losses, in some cases significantly.
• Investment Leverage Risk Investment Leverage occurs when the economic exposure is greater than the amount invested, such as when derivates are used. A Fund that employs leverage may experience greater gains and/or losses due to the amplification effect from a movement in the price of the reference source.
• Liquidity Risk Liquidity Risk is the risk that a Fund may encounter difficulties meeting its obligations in respect of financial liabilities that are settled by delivering cash or other financial assets, thereby compromising existing or remaining investors.
• Operational Risk Operational risks may subject the Fund to errors affecting transactions, valuation, accounting, and financial reporting, among other things.

2023 KID

HSBC GLOBAL INVESTMENT FUNDS - GLOBAL EQUITY CLIMATE CHANGE, a sub-fund of HSBC Global Investment Funds - AC (LU0323239441)

What are the risks and what could I get in return?

Risk Indicator

The summary risk indicator is a guide to the level of risk of this product compared to other products. It shows how likely it is that the product will lose money because of movements in the markets or because we are not able to pay you.

We have classified this product as 4 out of 7, which is a medium risk class. This rates the potential losses from future performance at a medium, and poor market conditions are could impact our capacity to pay you.

Be aware of currency risk. You will receive payments in a different currency, so the final return you will get depend on the exchange rate between the two currencies. This risk is not considered in the indicator shown above.

Additional risks not included in the Summary Risk Indicator (SRI) include: Liquidity, Counterparty, Operational, Investment Leverage and Exchange Rate Risk. Please refer to the prospectus for other risks.

This product does not include any protection from future market performance so you could lose some or all of your investment.

If we are not able to pay you what is owed, you could lose your entire investment.

The four performance scenarios

What do the four performance scenarios mean?

The four scenarios are based on four market assumptions, from the most unfavourable to the most favourable (Stress, Unfavourable, Moderate and Favourable scenarios). They are presented for a one-year period and for the fund’s recommended investment horizon.

These four scenarios are reviewed every month for your fund and are available on HSBC Asset Management’s fund centre website. The KID is updated once a year and if the Moderate scenario changes by over 5 per cent in terms of absolute value for either of the investment horizons.

How are the four scenarios calculated?

The method used to calculate the different performance scenarios is the same for all asset management companies.

• The Unfavourable, Moderate and Favourable performance scenarios are calculated based on the fund’s previous net asset values, combined with those of the benchmark if the fund has insufficient performance history.
• The Stress scenario is calculated using a probabilistic method retaining the volatility peaks observed in the analysis of historical data. (periods of significant risk).

Example – HSBC GIF Global Equity Climate Change

Performance Scenarios

What you will get from this product depends on future market performance. Market developments in the future are uncertain and cannot be accurately predicted.

The unfavourable, moderate, and favourable scenarios shown are illustrations using the worst, average, and best performance of the product over the last 10 years. Markets could develop very differently in the future.

The figures shown include all the costs of the product itself, but may not include all the costs that you pay to your advisor or distributor. The figures do not take into account your personal tax situation, which may also affect how much you get back. The stress scenario shows what you might get back in extreme market circumstances. The unfavourable, moderate, and favourable scenarios occurred for an investment between 2013 and 2018.

Source: HSBC Asset Management, for illustrative purpose only

Focus on fees

Are fees increasing with this new regulation?

No, fees are not increasing with this new regulation. Costs are going to be shown in a more transparent and comprehensive way, with direct and indirect transaction fees added to the information presented. These transaction fees, which were previously included in the fund’s performance but not shown, are not costs received by the asset management company. They are costs for executing market orders for the fund (and HSBC Asset Management does not benefit from them). The fees are now presented as a percentage and in euros. Two tables show you what makes up these costs and how they are presented over time.

Example – HSBC GIF Global Equity Climate Change

2022 KID

Charges

The charges you pay are used to pay the running costs of the Fund, including the marketing and distribution costs. These charges reduce the potential growth of the investment.

• The entry and exit charges shown are the maximum that may be charged. In some cases you may pay less. You can obtain the actual charges from your financial adviser.
• A conversion charge of up to 1.00 per cent of the Net Asset Value of the Shares which are being converted may be payable to the relevant distributor.
• The ongoing charges figure is based on last year's expenses for the year ending 31/03/2022. Charges may vary from year to year.

Further information on Charges can be found in the "Charges and Expenses" section of the Fund's Prospectus.

2023 KID

HSBC GLOBAL INVESTMENT FUNDS - GLOBAL EQUITY CLIMATE CHANGE, a sub-fund of HSBC Global Investment Funds - AC (LU0323239441)

* This illustrates how costs reduce your return each year over the holding period. For example it shows that if you exit at the recommended holding period your average return per year is projected to be 8.90 per cent before costs and 5.66 per cent after costs.

We may share part of the costs with the person selling you the product to cover the services they provide to you. They will inform you of the amount. These figures include the maximum distribution fee that the person selling you the product may charge up to 5.00 per cent. This person will inform you of the actual distribution fee.

Composition of costs

A conversion charge of up to 1.00 per cent of the Net Asset Value of the Shares which are being converted may be payable to the relevant distributor.