HSBC Asset Management is set to close its sustainable corporate bond ETF after it failed to meet its net asset value threshold.
Effective 2 June, the HSBC Bloomberg EUR Sustainable Corporate Bond UCITS ETF (HEUC) will close with a compulsory redemption of shares set to take place over the coming month.
The ETF, which currently houses $14.5m assets under management (AUM), is far below the $50m threshold required to be economically viable.
Under the fund’s prospectus, the directors have the discretion to redeem all of the shares and terminate the fund if it fails to meet the $50m limit.
“In making this decision, the directors also considered the reduced level of investor demand for the fund and considered it unlikely that the net assets of the fund would increase sufficiently in the future to justify its continuation,” HSBC AM said in a note to shareholders.
It comes a little over 18 months after ETF Stream revealed the launch of HEUC, which is listed on the London Stock Exchange with a total expense ratio (TER) of 0.18%.
The ETF tracks the Bloomberg Barclays MSCI Corporate SRI ESG-Weighted index which “seeks to provide consistent beta exposure to the high-quality and diversified corporate bond universe”.
Last month, HSBC AM become one of the first issuers to offer ETF and unlisted shares within an Ireland-domiciled fund, converting four global bond index funds to ETFs.