The firm will put $20m seed money into the GIF GEM Equity Alpha fund, which will use long and short positions to generate returns with low correlation to markets.
Omar Negyal, who joined HSBC last year from European hedge fund Lansdowne Partners, will run the portfolio along with Nick Timberlake, head of emerging markets at HSBC’s institutional investment arm.
The pair will manage the fund within a Ucits III structure – meaning it will be open to retail investors across Europe.
It will target a return of between 10 and 15 per cent annually. The management fee is fixed at 1.5 per cent for non-professional investors, with an outperformance fee of 20 per cent on returns above Libor.
Negyal said the team would take a high conviction approach to picking the 35 long and 35 short positions in the portfolio.
“The investment process is fundamentally driven by a highly disciplined approach to stock-picking,” he added.