New Listing

HSBC unveils short-duration global aggregate bond ESG ETF

The ETF will track corporate and government bonds

Theo Andrew

Olga De Tapia

HSBC Asset Management has launched its third fixed income ETF, a short-duration global aggregate bond ESG strategy, ETF Stream can reveal.

The HSBC Bloomberg Global Sustainable Aggregate 1-3 Year Bond UCITS ETF (HAGG) is listed on the London Stock Exchange with a total expanse ratio (TER) of 0.18%.

HAGG tracks the Bloomberg MSCI Global Aggregate 1-3 SRI Carbon ESG-weighted index which offers exposure to both corporate and government bonds across developed and emerging markets.

Classified as Article 8 under the Sustainable Finance Disclosure Regulation (SFDR), the index will target a carbon emission intensity reduction of 50% or more, an ESG improvement score of at least 5% relative to the parent index.

The screening process means it ensures a “slight overweight position on ESG leaders and an underweight position on ESG laggards”, excluding those involved in controversial industries and with poor ESG ratings.

Incorporating ESG factors into government bonds has been one of the biggest challenges facing the industry, particularly in developed markets as investors struggle to separate governments on their ESG performance.

Olga de Tapia (pictured), global head of ETF and indexing sales, HSBC AM, commented: “Providing our clients with a viable means of improving the social and environmental impact of their portfolios is a priority for us.

“As ETFs continue to play an ever-greater role in client portfolios, it is crucial that they support the net-zero transition. With a significant improvement in ESG score and a notable reduction in carbon intensity, our latest fixed income ETF will help investors to achieve this.”

HSBC AM launched its first fixed income ETFs in November, the HSBC Bloomberg EUR Corporate Sustainability Bond UCITS ETF (HEUC) and the HSBC Bloomberg USD Corporate Sustainability UCITS ETF (HUSC), both listed on the London Stock Exchange with a TER of 0.18%.

At the time the UK asset manager said it was part of a wider range of ETFs that were expected to be listed in the coming weeks.

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