HSBC Asset Management (HSBC AM) is expanding its sustainable fixed income ETF range with the launch of the HSBC Bloomberg Sustainable Global Aggregate 1-3y Bond UCITS ETF.
The fund listed on the London Stock Exchange with further listings expected in Europe in the following weeks. It follows the launch of the HSBC Bloomberg EUR Corporate Sustainable Bond UCITS ETF and the HSBC Bloomberg USD Corporate Sustainable Bond UCITS ETF earlier this month.
The fund aims to achieve a carbon emission intensity reduction target of greater than 50 per cent, an ESG score improvement target of over 5 per cent, relative to the parent index, and is classified as Article 8 under the Sustainable Finance Disclosure Regulation (SFDR).
It tracks the Bloomberg MSCI Global Aggregate 1-3 Year SRI Carbon ESG-Weighted Index, an investment grade index which seeks to provide broad-based and diversified exposure across fixed income asset classes, including government and corporate bonds across both developed and emerging markets.
The index’s methodology incorporates all three of Bloomberg’s existing ESG index approaches, alongside an additional carbon intensity screen. The additional filter enables the screening process to not only remove issuers involved in controversial industries and those with poor ESG practices, but to also tackle the most immediate of environmental issues by excluding the worst carbon emissions offenders. This ensures a slight overweight position on ESG leaders and an underweight position on ESG laggards.
Olga de Tapia, Global Head of ETF & Indexing Sales, HSBC AM, commented: “Providing our clients with a viable means of improving the social and environmental impact of their portfolios is a priority for us. As ETFs continue to play an ever-greater role in client portfolios, it’s crucial that they support the net zero transition. With a significant improvement in ESG score and a notable reduction in carbon intensity, our latest fixed income ETF will help investors to achieve this.”
The fund will be rebalanced on a monthly basis. As ESG practices evolve and issuers disclose more data around their ESG thinking, the screening methodology will adapt accordingly.