HSBC Global Asset Management (HSBC GAM) is working on plans to launch a range of ‘smart beta’ index funds to the wholesale market.
The group has launched a range of HSBC Economic Scale Indices with equity constituents weighted according to their contribution to economic output, rather than market capitalisation, as is traditional.
Phil Reid, head of UK external distribution at HSBC GAM, said the indices were launched for the institutional market, but that the group is “looking to add funds over time”, including products aimed at wealth managers and discretionary managers. The funds will form part of the Luxembourg-domiciled HSBC Global Investment Funds range.
The indices are calculated by Euromoney Indices. The weighting of each company is calculated by the difference between the value of its output (primarily sales data) and the value of its inputs (what it is required to buy to produce its output). BT, Barclays and Tesco all feature in the top 10 constituents in the HSBC Economic Scale United Kingdom index, but do not feature in the top 10 in MSCI’s market cap-weighted UK index.
Among those available now are indices of companies based in the UK, the US, Asia ex Japan, Europe and emerging markets. In each case, the back-tested performance of the indices has outperformed comparable indices run by MSCI, which weights companies by market cap.
HSBC GAM has roughly £4.3bn invested across eight tracker funds listed in IMA sectors, and 26 ETFs listed on the London Stock Exchange.
