Jimmy Choong, HSBC Asset Management
HSBC Asset Management (HSBC AM) said that its latest sustainable multi-asset fund will launch on 21 January, with an IPO period from 10 January through 21 January.
“The growth in sustainable assets has been rapid. One of the major drivers is changing business environments, which cause investors to focus more on sustainable investing. Therefore, incorporating the ESG criteria into investment decisions is no longer a trend,” Jimmy Choong, associate director, Hong Kong multi asset and wealth, HSBC Asset Management, said to a media briefing.
The product, which is managed by Choong (who also runs the HSBC Asia Multi-Asset High Income Fund) allocates 44% of its assets in bonds, including 20% in global high yield bonds, and 24% in emerging markets fixed income.
In particular, the team favours Asian fixed income with over one-third of the assets allocated to emerging market local bonds issued by Asian countries such as China, Malaysia, Indonesia, Thailand and India.
“The policies in these counties have been supportive towards ESG and we expect [them] to continue this year. Also, inflation in these economies is benign, remaining below 3%. So, we do not see the need for these countries to raise interest rates over the course of 2022,” Choong added.
“Emerging market domestic currency bonds yield [on average] around 5%. This makes them appealing compared with core developed government bonds which yield less than 1%.”
The fund also has 13.5% exposure to both corporate and government green bonds.
Equity allocation
More than 37% of the fund’s assets are invested in equities, with 24% in global quant income stocks. A further 4% is allocated to real estate equities, according to the fund fact sheet.
Compared with a market-based portfolio, the HSBC fund is expected to have a 10% improvement on the average ESG scores and a 21% reduction in carbon intensity.
In the investing process, the management team uses both positive screening to identify investments with better ESG performance relative to peers and negative screening to exclude certain sectors which are not aligned with certain sustainability principles.
The fund also invests in sustainability themes such as climate change, new energy, recycling.
The fund was first approved by Hong Kong’s Securities and Futures Commission in July 2021, but the fund manager said it was not an “optimal time” to launch the product then.
It is denominated in US dollars, has 7 share classes in other currencies including Hong Kong dollars, Renminbi, Canadian dollars, and Euros.
Since launching its first socially responsible fund in 2001 in France, 90% of HSBC AM’s AUM now incorporate ESG considerations. In 2021, the firm introduced 17 sustainability focus funds around the world.
