HSBC Multi-Factor Emerging Markets Equity UCITS ETF

Issuer: HSBC

Asset Class: Equity

TER: 35bps

Trading Currency: GBP

Pays Income: False

Listing Date: 22 Aug 2025

Ticker: HQIE

ISIN: IE000893FCN6

This investment product offers exposure to a diversified portfolio of emerging market equities through an actively managed, quantitative strategy. It deviates from traditional market-cap weighted approaches by systematically selecting stocks based on multiple proven investment factors. The objective is to outperform the broader emerging market equity index over the long term. By employing this multi-factor model, the fund aims to capture potential excess returns associated with specific stock characteristics such as value, momentum, quality, low volatility, and size. The strategy is built upon academic research suggesting that these factors have historically delivered superior risk-adjusted returns compared to the general market.

The investment process is rules-based and data-driven. The portfolio managers use a proprietary quantitative model to analyse a large universe of emerging market stocks. This model scores and ranks companies based on their attractiveness across the targeted factors. For example, 'value' stocks might be identified as those trading at a low price relative to their fundamentals, while 'quality' companies exhibit stable earnings and strong balance sheets. The model then constructs a portfolio that has a balanced and optimised exposure to these desired factors, while managing risk through diversification and constraints on country and sector weights. This systematic approach removes emotional bias from the investment decision-making process, aiming for consistent exposure to sources of potential outperformance.

This fund is suitable for investors seeking to enhance their emerging markets allocation with a strategy designed for potential long-term capital growth. It may appeal to those who believe in factor-based investing and are looking for a more sophisticated alternative to passive, market-cap weighted index trackers. The active, quantitative nature of the product means it is targeted at investors with a medium to high-risk tolerance and a long-term investment horizon, as emerging markets can exhibit higher volatility than developed markets. It can serve as a core holding within an emerging markets equity portfolio or as a strategic satellite position to complement existing passive investments, offering a distinct and potentially return-enhancing exposure.