HSBC Asset Management has launched a new fixed income ETF in Europe, offering socially responsible exposure to a globally diversified portfolio across investment-grade bond sectors.
Olga De Tapia, Global Head of ETF & Indexing Sales at HSBC Asset Management.
The HSBC Global Aggregate Bond ESG UCITS ETF is currently available in unlisted share classes, with a listing on the London Stock Exchange expected in the near future.
This launch marks the latest HSBC AM product to be introduced in both listed and unlisted formats — a relatively new approach that the firm began implementing earlier this year.
The new fund serves as the ESG counterpart to the HSBC Global Aggregate Bond UCITS ETF (HGAS LN) which is the largest Global Aggregate Bond UCITS ETF in Europe with approximately $13 billion in assets. Notably, the majority of these assets are held in unlisted share classes, with ETF share classes of the fund being introduced earlier this year in May.
The ESG-tailored fund tracks the Bloomberg MSCI Global Aggregate SRI Carbon ESG-Weighted Select Index, which is derived from the parent Bloomberg Global Aggregate Index — a flagship benchmark for global investment-grade debt spanning twenty-eight local currency markets.
The parent index includes Treasury, government-related, corporate, and securitized fixed-rate bonds issued by entities in both developed and emerging markets.
To be included in the index, issuers within the corporate, covered, agency, and supranational sub-sectors must meet specific ESG criteria including a minimum MSCI ESG Rating of BB and an ESG Pillar Score of at least 2, covering environmental, social, and governance factors.
The index also excludes issuers flagged for severe environmental controversies, non-compliance with UN Global Compact Principles, or involvement in restricted business activities such as weapons systems, adult entertainment, thermal coal power generation, Arctic oil and gas production, and other oil and gas-related activities surpassing defined revenue thresholds.
The index applies an ESG-tilted weighting methodology that favors higher-rated issuers (those with ESG scores of AAA, AA, or A) at the expense of lower-rated issuers (BB), all while maintaining sector neutrality relative to the parent index. To mitigate concentration risk, individual issuer weights are capped at 2%.
The fund has an expense ratio of 0.09% and is classified as Article 8 under the European Union’s Sustainable Finance Disclosure Regulation (SFDR).
Olga De Tapia, Global Head of ETF & Indexing Sales at HSBC Asset Management, said: “The launch of the Global Aggregate Bond ESG UCITS ETF reflects our commitment to developing innovative fixed income solutions, combining a globally diversified approach with sophisticated ESG methodologies. This latest addition to our Fixed Income ETF range aims to help investors meet their investment objectives through diversified fixed income exposure while supporting the transition towards a low-carbon economy.”