HSBC Global Asset Management has launched a new Australian Dollar Liquidity Fund designed to compete with bank deposits as Basel III begins to take hold.
The Australian Dollar Liquidity Fund has been launched by HSBC in response to demand from institutional and wholesale clients who are "seeking new ways to invest surplus cash".
Under the Basel III regulations, banks can no longer rely on clients' non-operational cash deposits for their liquidity test.
"[This means] investors will need to find new liquidity and capital preservation solutions to gain similar or better yields for their non-operational cash reserves," said HSBC.
Head of HSBC Global Asset Management in Australia, Geoffrey Pidgeon, said the firms regional treasury centre clients across Asia-Pacific have commented on the "lack of diversified cash management solutions for the Australian dollar".
"The AUD fund will invest in a wider range of onshore and offshore assets than traditional Australian money market funds, giving investors a greater level of asset diversification," Mr Pidgeon said.
The fund will offer same-day liquidity in Australia's $2.5 trillion cash market, he said.
"Many investors, particularly those in Asia-Pacific, see the Australian market and currency as a strong and stable investment option. This new AUD fund will provide a viable low-risk cash management solution for investors while still providing attractive money market yields," Mr Pidgeon said.
The Australian Dollar Liquidity Fund is HSBC Global Asset Management's 11th liquidity fund currency.