HSBC MSCI USA Climate Paris Aligned UCITS ETF

Issuer: HSBC

Asset Class: Equity

TER: 12bps

Trading Currency: GBP

Pays Income: False

Listing Date: 04 Aug 2021

Ticker: HPAS

ISIN: IE00BP2C1S34

This fund offers targeted exposure to a portfolio of U.S. large and mid-capitalization stocks selected and weighted to be collectively compatible with the carbon emission reduction goals of the Paris Agreement. The underlying index employs a rigorous methodology aligned with the EU's Paris-Aligned Benchmark (PAB) framework. This means it not only significantly reduces exposure to carbon-intensive companies but also aims for a further year-on-year decarbonization trajectory. The strategy is designed for investors seeking to align their core U.S. equity holdings with a 1.5°C global warming scenario, thereby mitigating long-term transition risks associated with climate change.

The investment approach goes beyond simple exclusionary screening. It reweights constituents from a parent U.S. equity index based on their climate credentials, such as carbon intensity, efforts to reduce emissions, and revenues generated from green activities. Companies that are leaders in the climate transition are overweighted, while those with higher climate-related risks are underweighted or excluded. This results in a portfolio that maintains broad market exposure to the U.S. economy but with a distinct and measurable tilt towards sustainability and decarbonization. By investing in companies better positioned for a low-carbon future, the fund seeks to capture opportunities arising from innovation in clean technology, energy efficiency, and sustainable resource management.

Ultimately, this investment vehicle serves as a strategic tool for those looking to construct a climate-resilient portfolio without forgoing exposure to the world's largest equity market. It provides a transparent, rules-based solution for integrating ambitious climate objectives into an investment strategy. It is suitable for long-term investors who believe that companies proactively managing their environmental impact and contributing to climate solutions are better positioned for sustainable growth. The fund's accumulating share class structure automatically reinvests dividends, which can enhance the effects of long-term compounding for investors.