HSBC ICAV GLOBAL SUKUK UCITS ETF
| Issuer: HSBC |
| Asset Class: Fixed Income |
| TER: 70bps |
| Trading Currency: USD |
| Pays Income: False |
| Listing Date: 17 Jan 2025 |
| Ticker: HSKD |
| ISIN: IE0009U8IBU8 |
This fund provides exposure to the global Sukuk market. Sukuk are Shariah-compliant financial instruments, often referred to as Islamic bonds. Unlike conventional bonds that involve interest payments (riba), which is prohibited in Islam, Sukuk represent ownership in a tangible asset, service, or project. The returns are generated from the profits of the underlying asset rather than from interest. This structure aligns with the principles of Islamic finance, focusing on ethical and asset-backed investments. The fund aims to track the performance of a benchmark index composed of investment-grade, sovereign, quasi-sovereign, and corporate Sukuk issued globally.
This investment is particularly suitable for individuals and institutions seeking to build a portfolio that adheres to Shariah principles. It offers a unique diversification tool within a fixed-income allocation, providing access to a growing segment of the global debt market. Beyond its religious and ethical alignment, the fund can appeal to a broader audience of investors interested in asset-backed securities and exposure to the economies of major Sukuk-issuing countries, which are predominantly located in the Middle East and Southeast Asia. The focus on investment-grade instruments helps to manage credit risk, making it a potentially suitable option for those seeking relatively stable income generation.
The primary benefit is gaining diversified, convenient, and cost-effective access to the global Sukuk market, which can be difficult for individual investors to access directly. The asset-backed nature of Sukuk may offer a degree of security compared to unsecured conventional bonds. However, investors should be aware of the associated risks. These include credit risk, as the issuers could default on their obligations, and interest rate risk, where changes in global rates could affect the value of the Sukuk. Additionally, there are concentration risks, as the market is heavily weighted towards a few countries and sectors. Political and economic instability in the key issuing regions could also impact the fund's performance.
