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The HSBC MSCI Japan Islamic ESG UCITS ETF aims to closely track the returns of the MSCI Japan Islamic ESG Universal Screened Select Index, integrating environmental, social, and governance (ESG) metrics into its investment strategy. The index currently offers exposure to 44 large and mid-cap Japanese companies reflecting Shariah investment principles. Shariah exclusions are applied for companies involved in alcohol, gambling, pork-related products along with climate-based exclusions. Financial ratios derived from total assets also influence the screening process.
The HSBC FTSE EPRA Nareit Developed Islamic UCITS ETF, on the other hand, tracks the FTSE EPRA Nareit IdealRatings Developed Islamic index of Shariah compliant listed real estate companies and real estate investment trusts (REITs) in developed markets. This index is screened quarterly for Shariah compliance by IdealRatings for business and financial activities.
Both funds have been admitted to the Official List and commenced trading on the London Stock Exchange’s main market for listed securities. The total expense ratios (TERs) for HIJP and HINS are 0.30% and 0.35%, respectively.
Olga de Tapia, global head of ETF and indexing sales at HSBC AM, highlighted that these products aim to cater to a portion of the population that invests according to a faith-based philosophy. She noted that there are currently very few instruments adhering to these values. The target audience varies by country, but in the UK, France, Switzerland, and Benelux, there is demand from pension schemes, wealth managers, and family offices.
The launch of these ETFs continues HSBC AM’s trend of building out its Shariah-compliant suite. The firm had previously launched Europe’s first global sukuk ETF earlier in September and unveiled five Shariah-compliant ESG ETFs targeting different geographical exposures last November.
The expansion of HSBC’s Shariah-compliant offerings comes as the company demonstrates strong financial performance. According to InvestingPro data, HSBC’s market cap stands at 153.9B USD, with a P/E ratio of 6.57 and a revenue growth of 28.13% in the last twelve months. The company’s commitment to its dividend policy is also notable, with a dividend yield of 7.88% and a record of raising its dividend for three consecutive years, as per InvestingPro Tips.
HSBC’s strong earnings have also led to upward revisions of their earnings forecasts by two analysts for the upcoming period. Additionally, the company is trading near its 52-week high, pointing to the strong investor confidence in the company’s performance and prospects. It’s worth noting that InvestingPro offers a wealth of additional tips, insights, and real-time metrics for companies like HSBC, accessible via its Pro Pricing product.
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