HSBC fund arm eyes green and frontier market launches

By Laurence Fletcher

BARCELONA (Reuters) - HSBC Global Asset Management is planning fund launches in the environmental technology area and so-called 'frontier' emerging markets as it focuses on areas of long-term growth, its chief executive told Reuters.

Speaking in an interview on the sidelines of the Fund Forum 2008 in Barcelona, a conference for fund executives, Mark McCombe said the firm is considering launching a hedge fund focused on environmental technology, a fund specifically focused on clean technology and a 'green' infrastructure fund.

"We are already planning our pipeline for 2009 ... Hedge is one we can think about, you can think about subsets of climate change so you might want to go into an infrastructure fund, or specifically clean technology," he said.

"You could argue very strongly that as many companies that benefit from climate change will also not benefit from climate change, which is a natural hedge universe ... There is surely a market out there for that sort of approach."

Funds focused on environmental technology have become increasingly popular in recent years as the profile of issues surrounding climate change has risen, although relatively few funds have adopted such specific focuses and the asset class remains a small part of investors' portfolios.

"Collectively (with a number of other firms) we're trying to up the visibility of this asset class," said McCombe.

"This is a slow burn. This is something that will take many years to build into the investment psyche of your average retail investor because it's still seen as something little understood or a political issue as opposed to an opportunity for corporations to gain benefit."

He also said the firm was planning to launch a fund that uses computer-driven models to allocate actively between so-called frontier markets such as Vietnam, Indonesia and African countries -- areas of increasing investor interest in recent years.