HSBC Asset Management has launched a new thematic equity ETF in Europe providing exposure to companies developing solutions for the climate transition.
Olga de Tapia, Global Head of ETF and Indexing Sales at HSBC Asset Management.
The HSBC Nasdaq Global Climate Tech UCITS ETF has been listed on London Stock Exchange in US dollars (HNCT LN) and pound sterling (HNCS LN), as well as on Deutsche Boerse Xetra (H41V GY) and Borsa Italiana (HNCT IM) in euros.
Olga de Tapia, Global Head of ETF & Indexing Sales at HSBC Asset Management, said: “The launch of our new Climate Tech ETF reinforces our commitment to the future development of climate-focused technology and enables us to continue to serve global investors seeking broad exposure to such technology and this exciting forward-looking theme.”
Methodology
The fund is linked to the Nasdaq CTA Global Climate Technology Index which selects its constituents from a global universe of stocks with market capitalizations above $300 million and average daily trading volumes greater than $1m.
The index harnesses insights from the Consumer Technology Association (CTA) to screen for companies operating within industries aligned with the climate technology theme. These include power generation and storage, climate infrastructure, transportation, sustainable agriculture, and food technology.
Firms identified as belonging to the above industries are then scored across three dimensions: Thematic Revenue Score, Transition Score, and Innovation Score. The Thematic Revenue Score gauges the percentage of a company’s revenue derived from climate tech; the Transition Score qualitatively assesses a company’s progress towards a carbon-neutral business; and the Innovation Score is a measure of the company’s influence on achieving global carbon neutrality, considering factors like R&D investment and patent activity.
Based on these scores, companies are categorized as either Tier 1 or Tier 2. Tier 1 companies generate at least 50% of their revenue from climate tech, while Tier 2 companies must have at least 25% revenue exposure while also exhibiting high scores in transition and innovation.
The index uses a modified theme-adjusted free-float market capitalization-weighting scheme. Each company is assigned a ‘Weighted Score’ based on its performance across the three score dimensions, which then plays into the security’s Theme-Adjusted Free Float Market Value. This nuanced approach ensures that the index constituents reflect not just market value, but also their alignment and impact within the climate tech sector.
The ETF comes with an expense ratio of 0.50% and is classified as an Article 8 product under the European Union’s Sustainable Finance Disclosure Regulation (SFDR).