HSI ESG Enhanced Select Index ETF (3136.HK)

Important information

• The investment objective of HSI ESG Enhanced Select Index ETF (“HSI ESG ETF”) is to match, as closely as practicable, before fees and expenses, the HKD denominated total return performance (net of withholding tax) of the HSI ESG Enhanced Select Index (the "Index") through investing primarily in the constituent securities of the Index
• As “HSI ESG ETF” invests in a new index having only been launched on 29 November 2021. As such, HSI ESG ETF may be riskier than other index funds tracking more established indices with longer operating history
• As the use of ESG criteria in the construction of the Index may affect the HSI ESG ETF’s investment performance and, as such, the HSI ESG ETF may perform differently compared to similar funds that do not use such criteria, i.e. HSI ESG ETF may be concentrated in companies with a greater ESG focus and therefore may be more volatile than that of a fund with having a more diverse portfolio of investments. Moreover, there can be no assurance that the Index Provider’s assessment based upon data from data providers will reflect actual circumstances or that the stocks selected will fulfill ESG criteria. Since currently there is a lack of standardised taxonomy in relation to ESG investing strategies, the standard of disclosure adopted by funds in relation to the relevant ESG factors or principles may vary
• “HSI ESG  ETF” is also subject to investment risk, equity market risk, concentration and mainland market risks, risks associated with investments in companies with weighted voting rights, risks associated with investment in financial derivative instruments, PRC tax risk, trading risks, passive investment risks, reliance on market maker risks, tracking error risks, termination risks and reliance on the same group risk
• The Manager may at its discretion pay dividend out of capital or effectively out of the capital^ of HSI ESG ETF. Payment of dividends out of capital amounts to a return or withdrawal of part of an investor’s original investment or from any such capital gains attributable to that original investment. Any such distributions may result in an immediate reduction in the Net Asset Value per Unit
• Investments involve risks and investors may lose substantial part of their investment in “HSI ESG ETF”
• Investors should not only base on this material alone to make investment decisions, but should read the HSI ESG ETF’s offering documents (including the risk factors) in detail

^ The Manager may at its discretion pay distribution out of gross income while charging/paying all or part of HSI ESG ETF’s fees and expenses to/out of the capital of HSI ESG ETF (resulting in an increase in distributable income for the payment of distribution by HSI ESG ETF), and thereby effectively pay distributions out of the capital of HSI ESG ETF

See Hong Kong through a sustainable lens

We are proud to introduce the HSI ESG Enhanced Select Index ETF, the first ESG ETF based on Hang Seng Index. This SFC-authorised ESG ETF* helps investors tap into the sustainable investment trend. 

Why sustainable investing?

• Sustainable investing has gained significant traction over the past years
• Policymakers and regulators across markets are championing the importance of sustainable investment - warranting its trajectory in becoming an essential consideration for investments

• Failure to address ESG issues such as climate change and corporate governance could affect a company’s fundamentals and performance over the longer term
• Over the years, many large multinational corporations have suffered from substantial financial losses and share price drops following ESG risk events 

 

Source: HSBC Asset Management, Bloomberg, as of 31 January 2022. Share price figure refers to the decline in the first year following the ESG risk event. Past performance is not an indicator of future results. For illustrative purposes only.

Index methodology

Source: Hang Seng Indexes Company Limited.
Note: 1. Sustainalytics is the data provider of the ESG Risk Rating data, UNGC data and Product Involvement data. The ESG Risk Ratings measure the degree to which a company’s economic value is at risk from financially material ESG issues. Please refer to the details in the Hong Kong Offering Document. 2. Product Involvement Screening areas and the respective threshold are: i) Thermal Coal Extraction; Tobacco Products Production; Tobacco Products Retail (if equal to or over 5% of revenue); ii) Thermal Coal Power Generation (if equal to or over 5 per cent of Capacity); and iii) Controversial Weapons (Any involvement). 3. Subject to an 8 per cent cap on individual constituent weight for each Index constituent.

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