HSBC sharpens focus on ESG with latest European ETF offering

HSBC Asset Management is bolstering its range of exchange traded funds with an environmental, social and governance focus with four product launches.

The HSBC MSCI World Value ESG Ucits ETF and the HSBC MSCI World Small Cap ESG Ucits ETF have already listed on the London Stock Exchange.

HSBC will list the HSBC MSCI Emerging Markets Value ESG Ucits ETF and the HSBC MSCI Emerging Markets Small Cap ESG Ucits ETF on October 28 and November 7 respectively.

The ETFs, classified as article eight products under the EU Sustainable Finance Disclosure Regulation, will subsequently be launched across European exchanges.

This article was previously published by Ignites Europe, a title owned by the FT Group.

The value ETFs will track the MSCI Target Value SRI Screened World and Emerging Indices, which are designed to combine factor and ESG exposure simultaneously.

The indices will apply standard restrictions, such as the exclusion of controversial weapons and a requirement that companies cannot derive 2.5 per cent or more revenue from thermal coal. They will seek to maximise the exposure to the target factor alongside a 20 per cent ESG score improvement relative to its parent market-cap weighted index.

Meanwhile, the small-cap ETFs will track the MSCI World Small Cap ESG Leaders SRI Select Index and MSCI Emerging Small Cap Select SRI Screened ESG Index.

The global index targets coverage of 50 per cent of the underlying MSCI parent index and focuses on firms that have high ESG ratings relative to their sector peers. The emerging market index integrates companies demonstrating a robust ESG profile as well as a positive trend to improving that profile, while maintaining a broad and diversified universe.

Both indices exclude companies found to be in violation of international norms and companies involved in controversial weapons.

Olga de Tapia, global head of ETF and indexing sales at HSBC AM, said: “Our aim is to build an investor toolkit that allows them to incorporate different factor exposures, starting with the value factor and small capitalisation.

“This product set provides investors with a means of building non-standard risk exposures into their portfolios and can be used as an alternative to standard market capitalisation indices.”

*Ignites Europe is a news service published by FT Specialist for professionals working in the asset management industry. It covers everything from new product launches to regulations and industry trends. Trials and subscriptions are available at igniteseurope.com.

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