HSBC Emerging Market Sustainable Equity UCITS ETF USD (Dist)
| Issuer: HSBC |
| Asset Class: Equity |
| TER: 18bps |
| Trading Currency: USD |
| Pays Income: False |
| Listing Date: 29 Jun 2022 |
| Ticker: HSMD |
| ISIN: IE000XYBMEH0 |
This fund offers investors a way to tap into the growth potential of developing economies while adhering to stringent climate-focused criteria. It provides exposure to a broad basket of large and mid-capitalization stocks across various emerging market countries. The core of its strategy is to track a benchmark specifically designed to align with the Paris Agreement's goal of limiting global warming. This is achieved by systematically reducing the portfolio's exposure to both transition risks, such as policy changes and new technologies, and physical risks associated with climate change. As a result, the fund's overall carbon footprint is significantly lower than that of a conventional emerging markets index.
The underlying index employs a rigorous screening and re-weighting methodology. It begins by excluding companies involved in controversial activities like manufacturing contentious weapons, civilian firearms, and tobacco. Furthermore, it filters out companies that derive significant revenue from fossil fuels, including thermal coal mining and power generation, as well as unconventional oil and gas extraction. Following these exclusions, the remaining securities are re-weighted. Companies demonstrating lower carbon emissions and those generating 'green' revenues are given greater prominence, while those with higher carbon intensity are underweighted. This meticulous process crafts a portfolio that favors businesses well-positioned for the global transition to a low-carbon economy.
For investors, this product can function as a core holding for emerging markets equity allocation, especially for those prioritizing environmental, social, and governance (ESG) factors. It is particularly suitable for individuals and institutions looking to decarbonize their investment portfolios and align their capital with long-term climate objectives. By integrating these forward-looking climate metrics, the fund not only offers participation in the dynamic growth of emerging economies but also provides potential resilience against climate-related financial risks, positioning it for the structural shift toward a more sustainable global economic landscape.
