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HSBC offers exceptional term deposit rate

HSBC is offering its “Premier” customers an exceptionally high 7% annual interest rate for a four month term with a minimum investment of $10,000, although the offer comes with significant strings.

Thursday, May 26th 2011, 2:13PM

by Jenny Ruth

HSBC, whose Hong Kong-based and British-listed parent is rated "AA" by Standard & Poor's and the equivalent by Moody's and Fitch, says the rate is 2.7 percentage points higher than the nearest rate for a similar term offered by a major bank in New Zealand.

The highest three-month term for $10,000 or more on www.depositrates.co.nz is currently 5.4% offered by the "BB" rated PGG Wrightson Finance which also has the highest offering for five months at 6.2%.

To qualify as "Premier," HSBC customers much have either a minimum combined home loans of $500,000 or $100,000 in savings and investments.

However, to qualify for the high term investment rate, customers must also invest $10,000 or more - this investment has to be equal or more to the term deposit - in one of HSBC's global unit trusts or world selection funds.

HSBC has three world selection funds, launched in August last year, with medium-to-low, medium-to-high and high risk options and four global unit trusts, all launched in August 2009.

While historical returns are no indication of likely future returns, and none of the funds has existed long, the performance of these funds has been mixed so far.

The highest returns by a country mile have been earned by the HSBC Asia ex-Japan Fund which in New Zealand dollars has earned a cumulative 18.38% since inception and 10.84% in the year ended April 29.

However, the worst performer on the same basis has been the HSBC China Fund with a negative 2.79% cumulative return since inception.

Of the world selection funds, the high risk Frontier Fund has performed best with a 0.52% per return since inception while the low-to-medium Foundation Fund earned negative 10.01% since inception.

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