HSBC MSCI USA Islamic ESG (HIUS)

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Brief information: HSBC MSCI USA Islamic ESG UCITS ETF is an open-end, UCITS compliant ETF incorpo rated in Ireland. The Fund’s objective is to replicate the performance of the MSCI USA Islamic ESG Universal Screened Select Index, while minimising as far as possible the tracking error between the Fund’s performance and that of the Index. The Index is a market-capitalisation weighted index.

Introduction to HSBC MSCI USA Islamics ESG (HIUS)

The investment objective of the Fund is to replicate the performance of the MSCI USA Custom Islamic Universal ESG Screened Index, which provides investors the opportunity to gain exposure to large- and mid-cap companies in the US equity market which comply with Shariah investment principles while integrating environmental, social and governance (“ESG”) metrics, while minimising as far as possible the tracking error between the Fund’s performance and that of the Index. The Index is constructed from the MSCI USA Islamic Index.

What are you investing in?

The Fund aims to track as closely as possible the returns of the MSCI USA Islamic ESG Universal Screened Select Index (the Index) while integrating environmental, social and governance (ESG) metrics. The Fund will invest in or gain exposure to shares of companies which make up the Index. The Fund qualifies under Article 8 of SFDR.

The Index is a subset of the MSCI Europe Islamic Index (Parent Index). It is made up of large and mid-cap companies (as measured by the market value of their shares) across 15 developed markets countries that comply with Shariah investment principles as defined by the Index Provider

How do you grow your money by investing in HSBC MSCI USA Islamics ESG (HIUS)?

By investing in the HSBC MSCI USAIslamics ESG (HIUS) fund, individuals can grow their money while promoting environmental and social causes. The fund replicates the performance of an index that screens out harmful activities and prioritizes companies with strong ESG ratings.

HSBC actively engages with companies on ESG issues, ensuring the fund’s investments align with sustainable objectives. Investing in HIUS allows individuals to achieve financial growth while making a positive impact.

What makes HSBC MSCI USA Islamics ESG (HIUS) 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 asset
  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 MSCI USA Islamics ESG (HIUS)

The HSBC MSCI USA Islamics ESG (HIUS) ETF has an overall ESG score of 79, indicating a relatively strong environmental, social, and governance performance compared to its peers. The environmental score is 75, suggesting that the companies included in the ETF demonstrate good environmental practices. The social score is 84, indicating strong performance in social factors such as labor practices, human rights, and community engagement. The governance score is 75, highlighting the companies’ adherence to good governance principles. However, the controversies score is 47, suggesting that there may have been some controversies or issues associated with the companies in the ETF. It’s important to consider the specific factors and controversies that contribute to the scores when making investment decisions.

Conclusion

In conclusion, the HSBC MSCI USA Islamics ESG (HIUS) fund aims to provide investors with exposure to large- and mid-cap companies in the US equity market that comply with Shariah investment principles while integrating environmental, social, and governance (ESG) metrics. The fund seeks to replicate the performance of the MSCI USA Custom Islamic Universal ESG Screened Index.

By investing in this fund, individuals can grow their money while aligning their investments with sustainable and ethical principles. The fund screens out companies involved in prohibited activities according to Shariah principles, such as alcohol, gambling, and tobacco. It also avoids companies with significant debt or excessive leverage.

The top holdings of the fund include companies such as Microsoft, Johnson & Johnson, Merck, Cisco Systems, and others. These holdings may change over time as the fund aims to track the performance of the underlying index.

The fund’s ESG rating indicates a relatively strong performance in environmental, social, and governance factors compared to its peers. However, there may have been some controversies associated with the companies in the fund, as reflected by the controversies score.

As with any investment, it’s important to conduct thorough research, review the fund’s prospectus, and consider your own investment goals and risk tolerance before making any investment decisions. Consulting with a financial advisor can also provide personalized guidance based on your specific circumstances.

Happy Investing!