ANNOUNCEMENT: Expert Investor is now PA Europe. Read more.

HSBC GAM to add series of ESG ETFs

Sustainable investment trend pushes vehicle’s assets under management to $25bn


Elena Johansson

HSBC Global Asset Management (Gam) has joined a growing trend by launching eight environmental, social and governance (ESG) exchange traded funds (ETFs); something the UN recently described as a potential mass market vehicle.

“We are planning to launch a new family of ESG ETFs which will provide investors with a core building block for their portfolios,” a spokesperson of HSBC Gam said.

It will launch them in the first half of 2020 and target both developed and emerging markets.

The firm currently manages $49.3bn (€44bn) in passive strategies and $8.5bn in ETF strategies out of a total of $512bn in assets under management, according to HSBC Gam.

UNCTAD report

The asset manager’s plan to substantially grow its ETF business in 2020 and subsequent years comes as the United Nations Conference on Trade and Development’s (Unctad) Investment and Enterprise Division released a working paper in November calling them a potential “mass market investment vehicle” to support the growth of the sustainable market.

The report cites one of the reasons being that ESG ETFs are low-cost, mostly passive financial instruments, which offer investors flexibility to invest in specific sectors and countries, as well as sustainability benchmarks.

ETFs usually track the performance of an index.

ESG ETF trend

The number of ETFs worldwide increased to 6,658 in 2019 from 453 in 2005, while assets under management have also risen steadily by more than tenfold, growing to $5.44trn in 2019 from $418bn in 2005, according to ETFGI, a UK independent research and consulting provider.

The number of ESG ETFs worldwide grew to 221 in June 2019 from 39 in December 2009.

From 2015 to June 2019, assets under management quadrupled, increasing to $25bn from $6bn, ETFGI and TrackInsight, a ETF analysis platform, have found.

HSBC Gam also plans to develop a fixed income ETF platform and, later in 2020, launch a passive platform for precious metals.

To support these initiatives, it will create around 15 roles next year.

Nicolas Moreau, global chief executive of HSBC Gam, commented: “ETFs are still one of the fastest growing investment products in Europe and Asia, and we are seeing increased demand from our clients for ESG-focused ETFs.”