Industry Updates

HSBC AM to exclusively use ETF share classes for fixed income range

A ‘more efficient’ way to build out is bond ETF range

Theo Andrew

a woman with long hair

HSBC Asset Management will exclusively use ETF share classes to expand its fixed income range after the firm listed the first such structure in Europe earlier this year.

Speaking to ETF Stream, Olga de Tapia, global head of ETF and indexing sales at HSBC AM, said creating listed ETF share classes on its mutual funds is a “much more efficient” way to build out its fixed income range.

It comes after the group expanded its fixed income ETF offering with the launch of the HSBC Global Sukuk UCITS ETF (HBKU) earlier this month, an ETF share class of an index fund it launched in January. 

“Everything we are going to do on the fixed income ETF space will be share classes because it gives us much more flexibility,” de Tapia (pictured) said.

“We have our platform for fixed income in the form of an Irish collective asset management vehicle (ICAV), and now we can create ETF share classes it is much more efficient to have one fund that gives access to multiple types of funds, rather than having two.”

The strategy is also born out of the UK asset manager’s legacy structure and its equity-heavy ETF range.

She added the group would be unlikely to offer share classes on its equity index funds due to the advantages of the US-Ireland double taxation treaty for equity ETFs domiciled in Ireland.

The group houses just two fixed income ETFs, the HSBC Bloomberg Global Sustainable Aggregate 1-3 Year Bond UCITS ETF (HAGG) and the HSBC Bloomberg EUR Corporate Sustainability Bond UCITS ETF (HEUC).

However, de Tapia said the ETF issuer wanted to expand its fixed income range to meet the demands of clients.

“We wanted to give access to clients such as robo-advisers that prefer to use ETFs for everything across equities and fixed income,” she said.

“We did not want to cannibalise our own range by launching the same fixed income products as ETFs, especially with funds that are so large in the indexing space.”

Having launched its first ETF share classes earlier in the year, the firm has plans to expand this.

Following the launches, HSBC AM became a top 10 fixed income ETF issuer in Europe, adding $6bn assets under management to its ETF range.

Featured in this article