- Manulife Investment Management and Hang Seng Bank are launching the Global Equity Diversified Income Fund in Hong Kong, targeting a 10% annualised yield paid monthly.
- Hang Seng will distribute the fund exclusively for the first three months from 5 February 2026 via branches and digital channels, with subscriptions opening 23 January 2026.
- The portfolio will invest at least 70% in global equities (including emerging markets) across growth, value and dividend styles, plus an options overlay to generate income and smooth returns.
- The yield is not guaranteed and payouts may include capital, while the options strategy can limit upside and introduces additional equity and concentration risks.
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The announcement of this fund represents a strategic move by Manulife and Hang Seng to meet growing demand among Hong Kong investors for income-oriented equity solutions, particularly in a macro environment where traditional fixed income yields are challenged.
Product positioning and design: The fund targets a 10% fixed annualised dividend yield paid monthly, which is an ambitious target in global equity markets. To achieve this, it uses a multi-pillar equity strategy (diversified across growth, value, and income equities) together with an active options overlay aimed at generating premium income and mitigating volatility. With at least 70% invested in equities, and allocations including emerging markets, the product offers both income and capital appreciation potential, though with elevated risk vs fixed income funds.
Distribution strategy and timing: The fund will be sold exclusively through Hang Seng Bank for its first three months beginning 5 February 2026, with initial subscriptions from 23 January 2026. This exclusivity can help Hang Seng deepen relationships with customers seeking yield-generating investments, and give Manulife a controlled launch with one major partner before broader roll-out.
Risk‐reward and implications: The target yield is high for an equity-based income strategy; to maintain it the fund may distribute from gains or capital, which can erode NAV especially if market returns are weak. The use of options overlays can cap upside in bull markets while providing downside cushioning, adding complexity, and requiring active management expertise. Geographic and equity style diversification are intended to smooth returns across cycles, but managers will need to manage currency risk, sector bias, and valuation risk, particularly in emerging markets.
Comparative context: Equity income funds with options overlays tend historically to show lower volatility and shallower drawdowns compared to pure equity funds, especially during stress periods, but at the cost of reduced participation in sharp market rallies. This implies potential for this fund to appeal to investors seeking a middle ground between yield and growth, but less so to those focused purely on capital appreciation.
Strategic implications: For Hang Seng Bank, the exclusivity period gives it a strong differentiator in its product offerings, enhancing its wealth management value proposition. For Manulife, launching this product strengthens its income‐generating fund lineup in Asia, extending its multi‐asset capabilities. However, performance expectations must be managed carefully to avoid disappointment should the target yield prove difficult-to-maintain under adverse conditions.
Open questions:
- What are the exact fee levels (management and performance) and minimum investment amounts, and how they compare to peers?
- How much of distributions are expected to come from capital vs income in different market scenarios?
- How will currency exposures be managed, especially for foreign equity and option positions?
- What are downside risk controls (e.g. maximum drawdowns, hedging for tail risk)?
- After the exclusivity period, what broader distribution strategy will Manulife deploy?
Supporting Notes
- The fund will allocate at least 70% of its portfolio to global equities, including emerging markets, and target a fixed 10% annualised yield with monthly dividends.
- It uses a globally diversified, multi-pillar equity strategy combining growth equities, value equities, equity income securities with an active options overlay for income enhancement and smoothing returns.
- Hang Seng Bank has exclusive distribution rights for the first three months starting 5 February 2026; initial subscription period begins on 23 January 2026.
- The fund is managed by Manulife Investment Management’s Multi-Asset Solutions Team, leveraging both top-down macroeconomic views and bottom-up fundamental research with risk management.
- The distributing yield is not guaranteed; distributions might come from income, realized gains, or even capital, especially in weak market periods, risking capital erosion.
- Use of options overlay may cap upside potential while helping cushion downside and stabilize income in volatile markets.