HSBC Asset Management has launched five Shariah-compliant ESG ETFs targeting regional and world equity markets, ETF Stream can reveal.

The first to be launched, the HSBC MSCI USA Islamic ESG UCITS ETF (HIUA), has listed on the London Stock Exchange on 18 November with a total expense ratio (TER) of 0.30%.

The remaining four ETFs targeting world, Europe, emerging markets and Asia-Pacific ex-Japan equities are set to launch “in the coming months”, the firm said.

HIUA tracks the MSCI USA CUST Islamic ESG Universal Screened Net USD index which applies Shariah exclusions on companies involved in alcohol, gambling and pork-related products from both a financial and business activity perspective.

This is followed by norms-based exclusions, a socially responsible investment (SRI) screen for companies involved in nuclear weapons and producers of firearms, as well as tobacco and controversial weapons.

Companies with stronger MSCI ESG scores will also carry a higher weighting. The four remaining ETFs will follow the same exclusionary and weighting methodology.

All five ETFs will be labelled Article 8 under the Sustainable Finance Disclosure Regulation (SFDR).

Olga de Tapia (pictured), global head of ETF and indexing sales at HSBC AM, said: “There is growing appetite for a range of Islamic passive products as investors look to build Shariah-compliant multi-asset portfolios.

“We see a natural overlap between faith-based screening and standard SRI filters and this set of toolkit funds will provide investors with a pathway to gain holistic risk-profiled market exposure in compliance with Shariah law.”

The five ETFs are:

  • HSBC MSCI USA Islamic ESG UCITS ETF (HIUA)
  • HSBC MSCI World Islamic ESG UCITS ETF (HIWO)
  • HSBC MSCI Europe Islamic ESG UCITS ETF (HIEU)
  • HSBC MSCI Emerging Markets Islamic ESG UCITS ETF (HIEM)
  • HSBC MSCI AC Asia Pacific ex Japan Islamic ESG UCITS ETF (HIAJ)

HIUA is the second Shariah-compliant US equity ETF to be launched in a week after ethical investing fintech Wahed unveiled the Wahed FTSE USA Shariah ETP (HLAL) in partnership with Leverage Shares.

In January, Invesco launched its first ETF tracking Shariah-compliant stocks with the Invesco Dow Jones Islamic Global Developed Markets UCITS ETF (IGDA).

HSBC AM continues to be active in the ETF market in the second half of the year after ETF Stream revealed it was launching four value and small-cap ESG ETFs last month. 

The UK asset manager also unveiled the HSBC World ESG Biodiversity Screened Equity UCITS ETF (HBDV) in August.

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