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Hong Kong to debut first ESG ETF based on Hang Seng Index

The HSI ESG Enhanced Select Index ETF is run by Hang Seng Investment Management.
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The ETF aims to capture potential financial returns while also considering social and environmental issues by investing in constituent securities of the HSI ESG Enhanced Select Index.

“Our new HSI ESG Enhanced Select Index ETF not only expands the breadth of our ETF portfolio, but is also an example of how to support improved ESG performance among listed companies by making it a tangible and attractive investment opportunity for both institutional and individual investors,” said Rosita Lee, head of investment product and advisory business at Hang Seng Bank, and director and chief executive officer at Hang Seng Investment.

The ETF started its initial offering on Monday with a price of HK$15 ($2) per unit for a board lot size of 100 units, and will launch on the Hong Kong stock exchange on Thursday.

The management fee is 0.08% per annum, while the estimated ongoing charges per year will be 0.2%.

The HSI ESG Enhanced Select Index, which the fund is tracking, was launched on 29 November last year.

It is constructed by screening companies within the Hang Seng Index with ESG principles and then weighing them with their tilting factors based on the ESG Risk Ratings assigned to each company.

The index has 55 constituent companies, 21 of them are Hong Kong ordinary stocks, 22 are Hong Kong-listed mainland companies, seven H shares and five red chips.

But after weighing, Hong Kong companies account for almost 50%, followed by 35% of other Hong Kong-listed mainland companies.

The index is made up of 36.11% companies in the financials sector, 18.75% in the information technology sector, followed by properties and construction (18.46%), and consumer discretionary (13.77%).

Established in 1993, Hang Seng Investment Management has HK$185.1b in AUM and is specialised in managing funds related to mainland China and Hong Kong markets.

Last November, the investment manager launched Hong Kong’s first ETF tracking the Hang Seng China New Economy Index.

“Moving forward, we will continue to incorporate ESG concepts into our product development to meet the growing demand from different types of investors,” Lee said.

Part of the Mark Allen Group.