HSBC MSCI Emerging Markets Value ESG UCITS ETF USD (Acc)

Issuer: HSBC

Asset Class: Equity

TER: 35bps

Trading Currency: USD

Pays Income: False

Listing Date: 08 Dec 2022

Ticker: HEMV

ISIN: IE000NVVIF88

This fund provides exposure to emerging market equities that exhibit strong value characteristics. This strategy targets companies that appear to be trading for less than their intrinsic or book value. Value investing in emerging markets can be particularly compelling, as these markets often feature higher growth potential but also greater volatility and instances of mispricing. By focusing on undervalued companies, investors may be able to capture upside potential as the market corrects these pricing inefficiencies, while potentially mitigating some downside risk associated with overvalued, high-growth stocks. The portfolio is diversified across various emerging economies, offering a broad entry point into this specific investment style.

Investing in emerging market value stocks offers a dual benefit: participating in the long-term economic expansion of developing nations and harnessing the historically proven premium of the value factor. These companies are often found in more traditional sectors like financials, materials, and energy, which can provide a degree of diversification away from the technology-heavy composition of many growth-oriented indices. The fund also incorporates a screening process to exclude companies involved in certain controversial activities, aligning the investment with specific ethical considerations. However, investors should be aware of the inherent risks, including currency fluctuations, political instability, and the possibility that seemingly cheap stocks remain undervalued for extended periods—a phenomenon known as a “value trap.”

This investment could serve as a core strategic allocation for investors seeking to enhance their international equity exposure with a specific factor tilt. It is suitable for those with a longer-term investment horizon who can tolerate the higher volatility typical of emerging markets. By blending the growth narrative of developing economies with the disciplined approach of value investing, the fund aims to deliver a unique source of returns that can complement a broader, more diversified global portfolio. The accumulating share class structure further enhances its suitability for long-term growth objectives by automatically reinvesting any dividends received.