Good news for ethical investors today 08/06/2020). Far eastern focused banking group HSBC, has launched a new range of equity-based ETFs that will have a focus on sustainability, part of the growing trend in ESG related investment themes.
The three funds, launched by the bank’s Global Asset Management subsidiary, will track European, US and Japanese equities. All three funds have listed on the London Stock Exchange as of last week, and are the first of a series of ESG ETF launches from HSBC, with additional funds expected in the coming weeks.
You can compare brokers for buying ETFs (exchange-traded funds) here.
What do these HSBC ESG ETFs include?
These subsequent ETF launches will include funds that track Emerging Markets and Asia Pacific ex-Japan
The three funds already launched will benchmark the FTSE Russell ESG Low Carbon select indices which reward companies that reduce carbon footprints and increase their ESG credentials.
You can find more details about FTSE Russell ESG indices here
Xavier Desmadryl, who is head of ESG research at HSBC GAM said that the funds would
“ Seek to encourage all companies held in our portfolios to establish and maintain high levels of transparency, particularly in their management of ESG issues and risks.”
“Engagement with these companies is an important element in both our ESG integration and our stewardship oversight.”
HSBC ethical investing
HSBC has a long record in ESG and ethical investment having been an early signatory to the UN PRI initiative and a founding and global steering committee member of Climate Action 100+
The bank believes that smart nature of the FTSE Russell ESG benchmarks will allow investors to access and reward those companies that are genuinely transitioning towards a low carbon future. For example, the FTSE Russell indices and therefore the HSBC ETFs will target companies that can show an overall +20% improvement in ESG credentials, a -50% reduction in carbon intensity and a -50% reduction in fossil fuel intensity.
At the same time excluding businesses that are involved in or generate +10% or more of their income from weapons production, coal or nuclear power (where the threshold is +25% of income).
What companies are included in the HSBC ethical & ESG ETFs
There are some well-known names among the constituents of the FTSE Russell ESG indices including Amazon, Alphabet and Apple, as well as Nestle, Visa and Johnson and Johnson.
Fees for the funds range between 0.12% and 0.18% per annum and they can be found under the following tickers
- HSBC Europe Sustainable Equity Ucits ETF: HSEP
- HSBC Japan Sustainable Equity Ucits ETF: HSJP
- HSBC USA Sustainable Equity Ucits ETF: HSUS
As we noted earlier the funds are initially listing in Londondon but they may also list on European exchanges to gain the maximum investor exposure.
ESG themes certainly seem to be striking a chord with both fund managers and retail investors and I am sure that Good Money Guide will be covering more of these type of events in the not too distant future.
Richard founded the Good Money Guide (previously Good Broker Guide) in 2015 and has been a broker for 20 years most recently at Investors Intelligence and previously a multi-asset derivatives broker at MF Global (Man Financial). Richard started his career working as a private client stockbroker at Walker Crips and Phillip Securities (now King and Shaxson) after interning on the NYMEX oil trading floor in New York and London IPE in 2001 & 2000.