Index-based investing

Our philosophy

Passive funds are only as good as the indices they track. Index selection is a major contributing factor to strong investment performance.

• We select indices with the greatest transparency and liquidity that capture the best possible representation of the market
• We take a pragmatic approach to managing index funds with two equally important objectives: close tracking and increasing risk-adjusted returns

Our process

Our tracking methodology and management approach focus on adding value; we aim for returns that closely track the index, while remaining within target tracking tolerances.

• Our teams have a clear focus on managing risk at the start of the portfolio construction process and on a daily basis thereafter
• We minimise explicit and implicit transaction costs to mirror index returns as closely as possible
• Portfolios are implemented using physical replication and optimisation
• Intelligent and efficient handling of index changes, corporate actions and dividend enhancement

HSBC strengths

• The large scale and the diversity of our index strategies allow us to deal at competitive prices and minimise costs for our clients
• Our index-based strategies cover global, regional and country indices using multiple vehicles such as ETFs, pooled funds, segregated mandates

Cost-efficient index replication

Characteristics

• Efficient exposure to a broad range of traditional market-cap indices
• Transparent end-to-end process focused on minimising implementation costs
• Disciplined risk-controlled investment approach
• Physical replication (full or optimised)
• Intelligent implementation of index changes, corporate actions and dividend enhancement

Passive implementation

• Global, regional and single country indices
• Multiple vehicles: ETFs, pooled funds, segregated mandates