HSBC Asset Management has expanded its suite of core sustainable equity ETFs with a new fund targeting stocks listed in developed European countries excluding the UK.
Olga de Tapia, Global Head of ETF & Indexing Sales, HSBC Asset Management.
The HSBC Europe ex UK Sustainable Equity UCITS ETF has been listed on London Stock Exchange in US dollars (HSXU LN) and pound sterling (HSXE LN) as well as on Xetra in euros (HSMX GY).
The fund comes with an expense ratio of 0.15%.
Olga de Tapia, Global Head of ETF & Indexing Sales, HSBC Asset Management, said: “Our priority is to provide our clients with a viable means of improving the environmental, social, and governance impact of their portfolios.
“This new ETF adds to our suite of sustainable passive building blocks and provides investors and asset allocators with greater opportunities to support the transition to more sustainable investing.”
Methodology
The ETF is linked to the FTSE Developed Europe ex-UK ESG Low Carbon Select Index which is based on an initial universe of large and mid-cap stocks from 15 developed market countries in Europe excluding the UK.
Violators of UN Global Compact principles, as well as companies with any involvement in controversial weapons and tobacco, are eliminated. In addition, companies with material operations in conventional weapons (as measured by more than 10% of total revenue), coal (10%), and nuclear power (25%) are also excluded.
The remaining constituents are then weighted using an optimization algorithm that seeks to boost the overall ESG score (based on company ESG ratings provided by Sustainalytics) by 20%, reduce total carbon emissions intensity by 50%, and reduce fossil fuel reserves by 50%.
This triple-tilt optimization approach also takes into consideration country and sector neutrality, within set bands, relative to the parent universe.
The index is reconstituted annually in September and rebalanced quarterly.
HSBC offers a further seven core ETFs deploying the same sustainability-focused investment approach. These funds target initial universes of stocks from global developed, US, European, UK, Japanese, Asia Pacific ex-Japan, and emerging market universes. The ETFs come with expense ratios ranging from 0.12% to 0.25%. Collectively, they house nearly $1.4bn in assets.
HSBC Developed World Sustainable Equity UCITS ETF; AUM $110m; expense ratio 0.18%
HSBC USA Sustainable Equity UCITS ETF; $600m; 0.12%
HSBC Europe Sustainable Equity UCITS ETF; $80m; 0.15%
HSBC UK Sustainable Equity UCITS ETF; $10m; 0.12%
HSBC Japan Sustainable Equity UCITS ETF; $160m; 0.18%
HSBC Asia Pacific ex-Japan Sustainable Equity UCITS ETF; $230m; 0.25%
HSBC Emerging Market Sustainable Equity UCITS ETF; $170m; 0.18%