HSBC USA Sustainable Equity UCITS ETF USD (Dist)

Issuer: HSBC

Asset Class: Equity

TER: 12bps

Trading Currency: GBP

Pays Income: False

Listing Date: 06 Jul 2022

Ticker: HSSU

ISIN: IE000YFGN231

This fund offers investors a targeted way to access the U.S. large and mid-capitalization equity market through a sustainability-focused lens. It is designed to passively track the performance of the FTSE USA ESG Low Carbon Select Index, which systematically incorporates environmental, social, and governance (ESG) criteria into its construction. The investment objective is to replicate the index's returns by investing in a diversified portfolio of U.S. companies that demonstrate strong sustainability characteristics. The physical replication method ensures that the fund holds the actual underlying securities of the index, providing direct exposure to these companies.

The underlying index employs a multi-faceted screening process. It starts with the broad FTSE USA Index and applies exclusionary filters to remove companies involved in controversial sectors such as weapons manufacturing, tobacco, and thermal coal production. Following these exclusions, the remaining constituents are evaluated and weighted based on their FTSE ESG Ratings and their operational carbon emissions intensity. This methodology results in a portfolio that overweights companies with superior ESG profiles and lower carbon footprints, while underweighting or removing laggards. The strategy aims to reduce the portfolio's overall exposure to carbon emissions and potential ESG-related risks compared to a standard market-cap-weighted U.S. equity index.

This product is well-suited for investors seeking to align their core U.S. equity holdings with responsible investment principles without sacrificing broad market exposure. By integrating ESG and low-carbon considerations, the fund provides an opportunity to invest in companies that are potentially better positioned for the long-term transition to a more sustainable economy. It serves as a core building block for a diversified portfolio, offering participation in the growth potential of the world's largest economy while simultaneously aiming to contribute to positive environmental and social outcomes.