HSBC MSCI Emerging Markets Small Cap ESG UCITS ETF (Acc)

Issuer: HSBC

Asset Class: Equity

TER: 35bps

Trading Currency: USD

Pays Income: False

Listing Date: 04 Nov 2022

Ticker: HESC

ISIN: IE000W080FK3

This fund offers targeted exposure to small-capitalization companies across various emerging market economies. It is designed for investors seeking to capture the high growth potential often associated with smaller, more nimble firms in developing nations. These companies can be less followed by analysts and may offer diversification benefits away from the large-cap-dominated mainstream emerging market indices. The strategy focuses on a segment of the market that can be difficult for individual investors to access directly, providing a diversified portfolio of smaller companies poised to benefit from local economic expansion and rising consumer demand.

A key feature of this investment vehicle is its integration of Environmental, Social, and Governance (ESG) principles. The underlying portfolio is constructed by excluding companies involved in controversial sectors such as tobacco, weapons, and fossil fuels, as well as those failing to meet minimum ESG standards. This screening process aims to mitigate certain risks and align the portfolio with the values of socially conscious investors. By focusing on companies that adhere to specific sustainability criteria, the fund seeks to provide not only financial returns but also a positive societal and environmental impact, appealing to those who wish to combine their growth objectives with responsible investing.

This fund could serve as a satellite holding within a well-diversified portfolio, complementing core holdings in developed markets or large-cap emerging market equities. It allows investors to add a distinct risk-return profile, tapping into the dynamic nature of emerging market small caps while maintaining a commitment to ESG principles. It is suitable for long-term investors with a higher risk tolerance who believe in the continued economic development of these regions and the potential for smaller companies to outperform over time.