HSBC Islamic Global EQ

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Brief information: HSBC Islamic Funds – HSBC Islamic Global Equity Index Fund is an open-ended SICAV Fund incorporated in Luxembourg. The fund aims to track as closely as possible the performance of the Dow Jones Islamic Market Titans 100 Index. The Index is designed to measure the performance of the largest 100 stocks traded globally that pass rules-based screens for adherence to Shariah investment.

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Introduction to HSBC Islamic Global Equity Index

The HSBC Islamic Global Equity Index is a financial benchmark that measures the performance of global equity markets from an Islamic finance perspective. It is designed to provide investors with a benchmark that adheres to Shariah principles, which govern ethical and religious practices in Islamic finance.

The index is developed and maintained by HSBC, one of the world’s largest banking and financial services organizations. HSBC has a strong presence in Islamic finance and offers its customers a range of Shariah-compliant products and services.

What are you investing in?

The Fund aims to track as closely as possible the performance of the Dow Jones Islamic Market Titans 100 Index (the Islamic Index).

The Index comprises the shares of companies in emerging and developed markets based anywhere in the world. The Fund will be passively managed and aim to invest in the shares of the companies in generally the same proportion as in the Index. The shares are selected by filtering the Index universe through screens for business activities and financial ratios to remove stocks that are not Shariah-compliant.

Top 10 Holdings	% of TNA
Apple	8.05
Microsoft	7.36
amazon.com	5.06
Tesla	3.38
Alphabet Inc Class A	3.18
Alphabet Inc Class B	2.85
Exxon Mobil	2.55
Johnson & Johnson	2.53
Visa Inc	1.91
Nvida	1.88

How do you grow your money by investing in HSBC Islamic Global  Equity Index

Investing in the HSBC Islamic Global Equity Index can provide individuals with an opportunity to grow their money over time. Here are some general steps and considerations for investing in this index:

Research the index: Understand its components, performance history, and Islamic principles.

1. Open an investment account: Choose a reputable institution offering access to the index.
2. Allocate funds: Decide how much money to invest in the index.
3. Monitor and review: Monitor the index’s performance and review your investment strategy periodically.
4. Seek professional advice: Consult a financial advisor specializing in Islamic finance for personalized guidance.

What makes HSBC MSCI Europe Islamic ESG (HIEU) Shariah Compliant?

Sharia investment principles do not allow investment in companies which are directly active in, or derive more than 5% of their revenue (cumulatively)2 from the following activities (“prohibited activities”): 

• Alcohol
• Adult Entertainment
• Cinema
• Conventional Financial Services1
• Defense / Weapons
• Gambling / Casino
• Hotels
• Music
• Online Dating2
• Pork related products
• Tobacco

For Financial  Screening

Sharia investment principles do not allow investment in companies deriving significant income from interest or companies that have excessive leverage. MSCI uses the following three financial ratios to screen for these companies:

• Total debt over total assets
  33.33% 30.00%
• Sum of cash and interest-bearing securities over total assets
  33.33% 30.00%
• Sum of accounts receivables and cash over total assets
  33.33% 30.00%

ESG rating of HSBC Islamic Global Equity Index

ESG Overall Score: 79
Environmental Score: 76	Social Score: 83	Governance Score: 76
Controversies score: 35

Based on the provided ESG (Environmental, Social, and Governance) ratings, the HSBC Islamic Global Equity Index has an overall ESG score of 79 out of 100. This indicates that the index has a relatively high level of adherence to ESG factors compared to its peers.

Regarding specific ESG criteria, the index scores 76 for Environmental, 83 for Social, and 76 for Governance. These scores suggest that the index considers environmental sustainability, social responsibility, and strong governance practices in its constituent companies.

However, it’s worth noting that the Controversies score is relatively low at 35. This may indicate that some of the companies included in the index have been involved in controversies or faced criticism related to ESG issues.

Overall, the HSBC Islamic Global Equity Index demonstrates a solid ESG performance, focusing strongly on environmental, social, and governance factors. Investors who prioritize ESG considerations may find this index appealing. Still, it’s essential to conduct further research and due diligence on individual companies within the index to fully understand their ESG practices and alignment with personal values.

Analysis of HSBC Islamic Global Equity Index:

Analysis	Over 1 Year	Over 3 Year
Alpha	0.33	-0.08
Annualized Standart Deviation	19.18	18.33
Beta	0.97	0.99
Correlation	0.92	0.94
Information ratio	0.14	-0.05
Max Drawdown	-9.76	-29.08
R/R Ratio	0.31	0.15
R-square	0.85	0.89
Sharpe ratio	0.21	0.09
Sortinio	0.16	0.08
Tracking error	2.15	1.78
Treynor ratio	1.22	0.49
Value at Risk normal	-7.39	-7.94
Value at Risk normal ETL	-9.71	-10.15
Value at Risk Quantile	-9.76	-9.72
Variance	30.65	28.01

• Alpha conclusion of HSBC Islamic Global Equity Index:

The HSBC Islamic Global Equity Index has performed slightly better than its benchmark over the past year, with a positive alpha of 0.33%. However, over the past three years, it has slightly underperformed its benchmark, with a negative alpha of -0.08%.

• Annualised Standard Deviation Conclusion of HSBC Global Equity Index:  

The HSBC Islamic Global Equity Index has shown an annualized standard deviation of 19.18% over one year and 18.33% over three years. This indicates that the index has experienced moderate to high levels of volatility during those periods.

• Beta Conclusion of HSBC Islamic Global Equity Index:

The HSBC Islamic Global Equity Index has a beta of 0.97% over one year and 0.99% over three years, indicating a close correlation to the overall market’s movements during those periods.

• Correlation conclusion of HSBC Islamic Global Equity Index:

The HSBC Islamic Global Equity Index has a high positive correlation of 0.92% over one year and 0.94% over three years, indicating a strong relationship between its returns and the benchmark or market index during those periods.

• Information ratio Conclusion of HSBC Islamic Global Equity Index:

The HSBC Islamic Global Equity Index has an information ratio of 0.14% over one year, indicating a slight outperformance on a risk-adjusted basis. However, over three years, the index has an information ratio of -0.05%, suggesting underperformance relative to the benchmark on a risk-adjusted basis.

• Maximum Drawdown Conclusion of HSBC Islamic Global Equity Index: 

The HSBC Islamic Global Equity Index had a maximum drawdown of -9.76% over one year and -29.08% over three years. This indicates the largest decline in value during those periods.

• Risk Reward Ratio Conclusion of HSBC Islamic Global Equity Index:

The risk-to-reward (R/R) ratio for the HSBC Islamic Global Equity Index is 0.31% over one year and 0.15% over three years. These ratios indicate the potential reward for each unit of risk taken during those periods.

• R-Square Conclusion of HSBC Islamic Global Equity Index: 

The HSBC Islamic Global Equity Index has an R-squared value of 0.85 over one year and 0.89 over three years, indicating a strong correlation between its returns and the benchmark or market index during those periods.

• Sharpe Ratio Conclusion of HSBC Islamic Global Equity Index:

The Sharpe ratio for the HSBC Islamic Global Equity Index is 0.21% over one year and 0.09% over three years, indicating the risk-adjusted return of the index during those periods.

• Sortino Ratio Conclusion of HSBC Islamic Global Equity Index:

The HSBC Islamic Global Equity Index had a Sortino ratio of 0.16% for one year and 0.08% for three years. This indicates modest risk-adjusted returns, suggesting the index didn’t perform exceptionally well in relation to risk during these periods.

• Tracking Error Conclusion of HSBC Islamic Global Equity Index:

The HSBC Islamic Global Equity Index has a tracking error of 2.15% over one year and 1.78% over three years. Tracking error measures the deviation of the index’s returns from its benchmark’s returns during those periods.

• Treynor Ratio Conclusion of HSBC Islamic Global Equity Index:

The Treynor ratio for the HSBC Islamic Global Equity Index is 1.22% over one year and 0.49% over three years, indicating the risk-adjusted performance of the index during those periods.

• Value at Risk Conclusion for HSBC Islamic Global Equity Index:

The Value at Risk (VaR) for the HSBC Islamic Global Equity Index is -7.39% over one year and -7.94% over three years, representing the estimated maximum potential loss within a certain confidence level during those periods.

• Value at Risk Normal ETL Conclusion for HSBC Islamic Global Equity Index:

The Expected Tail Loss (ETL) for the HSBC Islamic Global Equity Index, assuming a normal distribution, is -9.71% over one year and -10.15% over three years. ETL represents the average expected loss beyond the Value at Risk (VaR) level.

• Value at Risk Quantile Conclusion for HSBC Islamic Global Equity Index:

The Value at Risk (VaR) quantile for the HSBC Islamic Global Equity Index is -9.76% over one year and -9.72% over three years, representing the estimated maximum potential loss at a specific confidence level during those periods.

• Variance Conclusion HSBC Islamic Global Equity Index: 

The HSBC Islamic Global Equity Index variance is 30.65% over one year and 28.01% over three years, representing the variability or dispersion in returns during those periods.

Conclusion

The HSBC Islamic Global Equity Index has a strong ESG rating of 79, which shows its commitment to environmental, social, and governance factors. It has slightly outperformed its benchmark with an alpha of 0.33% over the past year. The index has experienced moderate to high volatility, with annualised standard deviations of 19.18% and 18.33% over one year and three years, respectively. It closely aligns with the overall market, as indicated by betas of 0.97% and 0.99% over one year and three years, respectively.

Over one year, the index has shown a positive information ratio of 0.14%, indicating modest outperformance considering the risk taken. However, over three years, the information ratio has been negative at -0.05%, suggesting underperformance compared to the benchmark on a risk-adjusted basis.

The index’s most significant decline in value, known as the maximum drawdown, has been -9.76% over one year and -29.08% over three years. The risk-to-reward ratio, which measures the potential reward per unit of risk, is 0.31% over one year and 0.15% over three years.

The index strongly correlates with its benchmark, with R-squared values of 0.85 over one year and 0.89 over three years. The Sharpe ratio, which considers risk-adjusted returns, is 0.21% over one year and 0.09% over three years.

It’s essential to consider these factors alongside other relevant information before making investment decisions. Seeking advice from a financial advisor can provide personalised guidance.

Happy Investing!