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HSBC launches economy-weighted smart beta ETF
by Robert St George on Jun 30, 2014 at 07:31
HSBC has listed an exchange-traded fund (ETF) based on companies’ economic footprint rather than their market capitalisation.
The HSBC Economic Scale Index Worldwide Equity Ucits ETF is fundamentally weighted according to the economic scale of firms and countries, assessed by the difference between the value of a business’s output and inputs to capture its contribution to the global economy.
The index contains more than 2,300 constituents, with the top three positions currently US giants Walmart and ExxonMobil followed by PetroChina.
Its largest sector exposure is financials at 17%, with the principal country weightings being to the US at 35% and Japan at 11%. France, China and the UK are tied in third place on 6% each.
For comparison, the three largest companies in the MSCI All Country World index are Apple, ExxonMobil and Microsoft. Financials are also the main sector in that index, representing 21% of it, while the US has a 49% weighting followed by the UK on 7.9% and Japan on 7.2%.
On an annualised basis the HSBC index has returned 9.2% over the past three years and 14.4% on a five-year view, compared with equivalent figures of 9.6% and 14.3% from the MSCI index.
The HBSC ETF will have a total expense ratio of up to 0.25%.
For more on ETFs, please visit www.citywire.co.uk/wealth-manager/cpd