# Source: HSBC Global Asset Management, data as at 30 June 2021
The benchmark data is that of the reference benchmark of the fund, Bloomberg Barclays Global Aggregate Corporates Diversified Hedged USD, as this data is calculated at fund level rather than share class level.
| Monthly Performance Commentary |
| --- |
| Fund Review June ended a strong first half of the year for credit markets with spreads continuing to tighten to cyclically tight levels as corporate earnings remain strong in the continued economic recovery. Long end rates fell over the month following weaker than expected payroll growth in April and June. IG spreads were somewhat muted over the month continuing to grind tighter while HY saw more movement ending the month 15 bps tighter. IG supply weakened slightly in June with $142 billion issued while HY was also weaker with $37 billion. IG flows remained positive, strengthening in June with $22.7 billion while HY was effectively flat for the month with inflows into funds being offset by outflows from ETFs. Global Investment Grade saw spreads tightened 4 bps in June with the fund’s benchmark returning 1.01%. Regionally the overweight to USD bonds and underweight to EUR bonds added to relative performance with the US outperforming Europe over the month on a USD hedged basis. Sector and issue selection added to relative performance with US, EUR and UK segments all outperforming their universes. From a regional perspective the strategy is overweight US bonds and underweight EUR bonds and slightly overweight UK bonds vs the benchmark. The regional weights for the US, EUR and UK are 57%, 33% and 9% respectively. The average rating is in line with the benchmark at A-/BBB+ with an overweight to BBB rated bonds and an underweight to AA and A rated bonds. The fund also has a small off benchmark exposure to BB rated bonds. From an industry perspective the strategy’s largest sector overweight is to financials where although less attractive given the recent rally we continue to see solid fundamentals as well as lower relative carbon footprints vs industrials. The main underweights are to consumer non-cyclicals on the basis of rich valuations and utilities on rich valuations as well as the heavier relative carbon footprint of the sector vs the overall benchmark. The overall duration is underweight the benchmark at 6.64 years with an overweight to the short end and an underweight to the long end on an option adjusted basis. Outlook Now halfway through 2021 we see a shift in the economy, away from a restoration phase which has characterized the post COVID economic recovery to an expansionary phase of the economic cycle. As a result, we see investors now more focused on central bank policy and comments around the start of tapering and policy normalization. While we believe policy moves could be sooner than had initially been expected earlier in the year we don’t anticipate the Fed lifting off before mid-2023. Credit fundamentals are solid and are expected to remain so through the course of the year as economic growth continues to be strong but spreads are at or close to historically tight levels offering less potential for tightening and a smaller cushion should we see additional volatility as markets react to further details regarding the path to policy normalization. For Investment Grade portfolios we have continued to reduce beta, selling into market strength and are now neutral to underweight beta with a continued focus on issuer selection in credits and sectors that are more cyclical in nature where we see some potential for further compression. We remain underweight duration with a steepening bias along the yield curve. While long end rates have fallen back with the yield curve flattening in Q2 we believe the longer term cyclical trend will continue to put upward pressure on rates in the second half of 2021. In High Yield credit fundamentals remain strong. Default rates having peaked earlier in the year are now less of a concern as the economy moves from restoration to expansion. Spreads are close to historically tight levels however and we expect them to remain somewhat range bound near term. We continue to rotate out of names that have performed well in order to create additional capacity should markets sell off so we can move into names that have lagged in the recovery so far. We also continue to look at credits which we believe are potential candidates to be upgraded into IG. |

| Carbon Footprint | Fund | Reference Benchmark |
| --- | --- | --- |
| Carbon Intensity | 93.62 | 213.52 |

Translation (ENFR, 2021-06-30):
# Source : HSBC Global Asset Management, données datées du 30 juin 2021
Les données de l'indice de référence sont celles de l'indice de référence du Fonds Bloomberg Barclays Global Aggregate Corporates Diversified Hedged USD, car ces données sont calculées à l'échelle du Fonds et non à l'échelle des catégories d'actions.
| Empreinte carbone | Fonds | Indice de référence |
| --- | --- | --- |
| Intensité de Carbone | 93,62 | 213,52 |