Alternative Investments/ESG: HSBC GAM Launches Sustainable Equity UCITS ETF

The new ETF finds a place in HSBC Global Asset Management’s suite of sustainable ETFs.

The HSBC Asia Pacific ex Japan Sustainable Equity UCITS ETF is a low-cost, passive investing vehicle for exposure to Asia Pacific equities ex Japan. It tracks customized FTSE Asia Pacific ex Japan ESG Low Carbon Emissions Select Index, an index that integrates ESG (environmental, social and governance), carbon emissions, and fossil fuel reserves considerations. (ETF Strategy)

HSBC Asia Pacific ex Japan Sustainable Equity UCITS ETF

The ETF will invest in large and mid-cap stocks listed in emerging and developed countries in the Asia Pacific region. However, the ETF excludes Japan. The index is the result of a collaboration with FTSE Russell to achieve:

  • an ESG score uplift of 20%
  • reduction of 50% in carbon intensity
  • reduction of 50% on fossil fuels reserves intensity

The fund employs an optimization algorithm to process information relating to each eligible company’s ESG rating (as measured by FTSE) and operational carbon emissions and fossil fuel reserves (based on TruCost and Carbon Disclosure Project data) to weight constituents to achieve the above parameters versus the parent universe, subject to country, industry, maximum stock capacity, maximum company weight, and minimum diversification constraints.

The HSBC Asia Pacific ex Japan Sustainable Equity UCITS ETF launched on August 20, 2020. It is listed on the London Stock Exchange. It is denominated in USD (HSXD LN) and GBP (HSXJ LN). The fund will launch in the rest of Europe in due course of time.

The ETF has a Total Expense Ratio of 0.25%.

Carmen Gonzalez-Calatayud, Head of ETF Capability at HSBC Global Asset Management, said: “Our new Asia-focused sustainable ETF complements our existing range which aims to provide investors with core, sustainable building blocks for their portfolios. The launch underpins our commitment to connecting investors with global opportunities and supporting the ongoing transition to a more sustainable economy and society.”

Other HSBC Sustainable Equity ETFs include the Europe Sustainable Equity, Japan Sustainable Equity, USA Sustainable Equity, and Developed World Sustainable Equity Ucits ETFs.

Record inflows into ESG ETFs

The fund managers have timed the launch of the HSBC Asia Pacific ex Japan Sustainable Equity UCITS ETF well. Fund flows show that investors have embraced ESG investing in a big way.

Global inflows into ESG ETFs and ETPs for the year 2020 to end-July swelled to a record of $38.78 billion. This was more than triple the figure of $12.37 billion in 2019 at the same time, according to ETFGI data.

Globally, the AUM tally of ESG ETFs/ETPs shot past the $100 billion mark to $101 billion.

Related Story:  Global AUM in ESG ETFs and ETPs Shoots Past $100B End-July

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