Industry Updates

HSBC AM to close four emerging market ETFs

Brazil, Mexico, Latin America and Turkey ETFs to close

Theo Andrew


HSBC Asset Management will close four emerging market ETFs due to low assets under management (AUM).

In a shareholder notice, the UK giant said the HSBC MSCI EM Latin America UCITS ETF (HMLA), the HSBC MSCI Brazil UCITS ETF (HBRL), the HSBC MSCI Mexico Capped UCITS ETF (HMED) and HSBC MSCI Turkey UCITS ETF (HTRD) will close on 10 May.

“The board of directors took into account the reduced investor demand for the fund[s] and considers it unlikely that the funds’ net assets will increase sufficiently in the future to justify the continuation of the fund[s],” it told investors.

HMLA has $36.5m in assets while HBRL houses $23.1m, both under the group’s $50m threshold for liquidating a fund.

Meanwhile, HMED has $19.3m assets under management (AUM) and HTRD has $14.9m in assets.

Brazilian, Latin American and Mexican equities have had a strong year, outperforming broader emerging markets driven by its agriculture and mining sectors.

However, the latter is the only market to carry is performance into 2024. Both Brazil and Latin America have fallen off so far this year, with HBRL returning -8.8% and HMLA -1.5% due to slower economic activity.

HSBC’s Latin America ETF has a total expense ratio (TER) of 0.60%, making it the most expensive ETF tracking the region.

Both the iShares MSCI EM Latin America UCITS ETF (LTAM) and the Amundi MSCI Emerging Markets Latin America UCITS ETF (ALAG) have TERs of 0.20%.

The group cut fees on its Brazil, Mexico and Turkey ETFs by 10 basis points in 2021 in a bid to garner fresh investor interest.

HBRL has a TER of 0.50%, significantly more expensive than the Franklin FTSE Brazil UCITS ETF (FVUB) with a headline fee of 0.19%.

In March, HSBC AM expanded its single-country emerging market range of ETFs with the launch of the HSBC S&P India Tech UCITS ETF (HITC).

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