An introduction to HSBC ETFs. January For professional clients only

Transcription

1 An introduction to HSBC ETFs January 2014 For professional clients only

2 Contents An investment partner you can trust 2 ETFs with competitive features 3 Key facts 5 Our ETF range in Europe 6 Key Risks 7 Important information 8 1

3 An investment partner you can trust Choosing the right exchange traded fund (ETF) for your investment portfolio is about choosing the right investment partner that can offer products with attractive features. HSBC ETFs are managed by HSBC Global Asset Management, a leading global investment manager that has a long track record of providing sound investment solutions to a wide range of investors around the world. We manage over 800 investment funds in more than 20 countries and territories around the world. ETFs have a clear role within our suite of investment funds. And since we don t just manage ETFs, we aim to bring you and your clients the benefit of our experience and scale in managing a diverse range of investment products worldwide. We have been managing ETFs since 2003 after launching our first products in Hong Kong. Today the HSBC Group is among the top four ETF managers by assets under management in Asia excluding Japan 1. Since 2009 we have been offering ETFs in Europe. Our European ETF range covers all the main developed and emerging market equity markets. HSBC ETFs - Keys Facts Physical-only investment approach High levels of transparency Highly competitive all-in fees Coverage of developed and emerging markets Sharp focus on risk control 1 Source: ETFGI, Asia Pacific (ex-japan) ETF and ETP industry insights July

4 ETFs with competitive features In designing and offering ETFs, we have listened to you and your clients and taken note of your preferences. We have accordingly committed ourselves to managing all our ETFs using the physical investment approach. We believe this approach allows us to deliver ETFs with a high degree of transparency and simplicity without compromising index-tracking accuracy. Over the longer term, fees have a significant impact on investment returns. ETFs are relatively low cost products but there is nevertheless a wide range of fees charged by ETF providers. We draw on our scale and efficient operations to deliver highly competitive all-in fees. We are not aiming to be the cheapest but you and your clients will certainly find us offering great value ETFs. Our range of physical ETFs offers a range of features and benefits that our clients have asked for: Transparency Every HSBC ETF publishes a full list of securities that it holds on a daily basis, in addition to up to date fact sheets on our website: Our fee structure is transparent: all costs are included in the Total expense ratio (TER) ie. the management fee and a list of other costs carried by the asset manager which include administration, custody and audit fees, legal, regulatory and registration expenses. There is no entry or exit fee. As ETFs trade on stock exchanges, they are subject to a bid-offer spread and broker commissions in the secondary market. In the primary market investors will be charged the creation or redemption fees in addition to the brokerage commission. Creation/redemption fees are charged by the Authorised Participant to cover transaction costs, custodian fees and taxes where applicable. These fees are available on request Cost effectiveness We keep our charges to an absolute minimum by harnessing our global capabilities and existing local expertise worldwide (especially in the emerging markets). The end result? The total expense ratios or TERs on most of our funds are very competitive Accurate index tracking Robust quantitative portfolio management, trading and risk monitoring processes are in place to allow HSBC ETFs to closely track their benchmark index both in terms of tracking difference and tracking error Asset allocation building blocks For each of our ETFs we have selected indices that we believe our clients find most relevant. Our ETFs therefore can provide clients with effective building blocks for globally diversified equity portfolio Liquidity and accessibility In addition to other market makers, HSBC Global Banking and Markets is committed to providing liquidity and competitive spreads on exchange Our ETFs are listed on the main European exchanges and registered for sale in several more European markets to make it easier for clients to access them Controlled risk All our ETFs use physical replication (we physically hold the stocks in the index we track) so there is no derivative counterparty risk associated with swap-based ETFs 3

5 Did you know? In Europe we offer a wide range of equity ETFs, ranging from the major developed markets to single emerging markets such as Brazil and Russia. Our HSBC MSCI Russia Capped UCITS ETF was the first Russian ETF available in Europe that tracks the locally listed market and is composed mainly of local Russian stocks. The ETF uses the physical fully-replicated investment approach. HSBC only offers ETFs that invest physically in relevant stocks. We don t offer swap-based ETFs since we believe that the physical approach allows us to deliver products that are inherently simpler and better understood. 4

6 Key facts All HSBC ETFs launched to date use a Physical Replication method to track their underlying index: 21 ETFs are fully replicated ETFs 1 5 ETFs are optimised physically replicated ETFs 2, including the HSBC MSCI World, the HSBC MSCI Emerging Markets, the HSBC MSCI Emerging Markets Far East, the HSBC MSCI China and the HSBC MSCI AC Far East Ex-Japan. Replication method UCITS IV compliant Fund domicile UK reporting fund status (UKRF) ISA eligible 3 SIPP eligible 4 TER (Total expense ratio) 5 Issuer Fund manager Custodian Fund administrator Authorised participant Primary listing Cross-listing Trading in multiple currencies Fund registered in several European countries Holdings of the fund Up to date fact sheet Physical replication approach Yes Ireland Yes Yes Yes HSBC Emerging Market country and regional ETFs with a 60bps TER are among the most competitive in Europe Across the range the TERs are very competitive HSBC ETFs Plc HSBC Global Asset Management (UK) Limited HSBC Institutional Trust Services (Ireland) Limited HSBC Securities Services (Ireland) Limited HSBC Bank Plc London Stock Exchange SIX Stock Exchange, NYSE Euronext Paris and Deutsche Börse GBP, EUR and USD UK, France, Germany, Italy, Netherlands, Switzerland, Spain and Sweden Published on a daily basis on Published on a monthly basis on 1 Fully replicated ETFs: the fund includes all index constituents in the weightings defined by the index. 2 Optimised replication: in some cases, when it is not considered cost-effective to buy all of the securities in the index (i.e. for very broad indices with large number of constituents, indices with less liquid constituents or market access difficulties), an optimisation approach is used. This involves buying a portion of securities within the index in order to track the index s performance. 3 Individual Savings Account. 4 Self-Invested Personal Pension. 5 The stated value may vary from year to year. 5

7 Our ETF range in Europe 26 equity ETFs covering the main developed and emerging country and regions Developed markets Global US Europe Asia Property Benchmark MSCI World HMWO, 0.35% MSCI USA HMUS, 0.30% S&P 500 HSPX, 0.09% MSCI Europe HMEU, 0.30% Euro Stoxx 50 H50E, 0.15% MSCI Pacific ex Japan HMXJ, 0.40% MSCI Japan HMJP, 0.40% FTSE EPRA/ NAREIT DEVELOPED ( ) HPRO, 0.40% Ticker TER MSCI Canada HCAN, 0.35% FTSE 100 HUKX, 0.35% FTSE 250 * ( ) HMCX, 0.35% Emerging markets Broad Regional Latin America Africa Eastern Europe Asia MSCI Emerging Markets UCITS ETF HMEF, 0.60% S&P BRIC 40 HSPB, 0.60% MSCI EM Latin America HMLA, 0.60% MSCI Brazil HBRL, 0.60% MSCI Mexico Capped UCITS ETF HMEX, 0.60% MSCI South Africa HZAR, 0.60% MSCI Russia Capped UCITS ETF HRUB, 0.60% MSCI Turkey HTRY, 0.60% MSCI China HMCH, 0.60% MSCI Taiwan HTWN, 0.60% MSCI EM Far East HMFE, 0.60% MSCI Korea HKOR, 0.60% MSCI AC Far East Ex-Japan UCITS ETF ( ) HMAD, 0.60% MSCI Malaysia HMYR, 0.60% MSCI Indonesia HIDR, 0.60% * Note for investors in Germany: It should be noted that for the Sub-Fund HSBC FTSE 250 no notification has been filed according to 132 Investment Act and that the Shares of this Sub-Fund may not be publicly distributed to investors within the scope of applicability of the Investment Act. ( ) These subfunds have not (yet) been authorised for public distribution in Switzerland. This material must therefore exclusively be directed towards qualified investors in the meaning of Art. 10 para. 3 of the Federal Collective Investment Schemes Act. There are risks involved with these types of investment. Please refer to the prospectus for general risk factors, and to the Key Investor Information Document (KIID) for specific risk factors. ( ) HSBC MSCI AC Far East Ex-Japan also covers two developed markets: Hong Kong and Singapore. 6

8 Key Risks The value of investments and any income from them can go down as well as up, and investors may not get back the amount originally invested. Where overseas investments are held, the rate of currency exchange may cause the value of such investments to go down as well as up. Emerging market risk: Investments in emerging markets are by their nature higher risk and potentially more volatile than those inherent in some established markets. Geographic risk: Some of the ETFs invest predominantly in one geographic area; therefore any decline in the economy of this area may affect the prices and value of the underlying assets. Russian Risk: There are significant risks inherent in investing in Russia, which could affect the value of investment. These include a lack of clarity in laws and regulations in the following areas: investor protection, banks and other financial services, the Russian economic system, taxation, transaction settlement and fiduciary duty and responsibilities of company management. Property Risk: The value of interests in real estate companies may be affected by changes in interest rates, tax laws and environmental laws and regulations. While the value of interests in REITs may be affected by the value of the property owned or the quality of the mortgages held by the trust. Stock market investments should be viewed as a medium to long-term investment and should be held for at least five years. Any performance information shown refers to the past and should not be seen as an indication of future returns. 7

9 Important information This document is intended for professional clients only and should not be distributed to or relied upon by retail clients. The material contained herein is for information purposes only and does not constitute investment advice or a recommendation to any reader of this material to buy or sell investments. Care has been taken to ensure the accuracy of this document, but HSBC Global Asset Management accepts no responsibility for any errors or omissions contained therein. Fund information HSBC ETFs are sub-funds of HSBC ETFs plc, an investment company with variable capital and segregated liability between sub-funds, incorporated in Ireland as a public limited company, and authorised by the Central Bank of Ireland. The company isconstituted as an umbrella fund, with segregated liability between sub-funds. Shares purchased on the secondary market cannot usually be sold directly back to the Company. Investors must buy and sell shares on the secondary market with the assistance of an intermediary (e.g. a stockbroker) and may incur fees for doing so. In addition, investors may pay more than the current Net Asset Value per share when buying shares and may receive less than the current Net Asset Value per Share when selling them. For investors in France All applications are made on the basis of the current HSBC ETFs plc prospectus, relevant Document d Informations Clés pour l Investisseur (DICI), supplement, and most recent annual and semi-annual reports, which can be obtained on our website: or upon request free of charge from CACEIS France, the centralising correspondent in France, 1/3 Place Valhubert, Paris. Investors and potential investors should read and note the risk warnings in the prospectus, relevant Document d Informations Clés pour l Investisseur (DICI), and fund supplement. For investors in Germany This document is designed for sales and marketing purposes for the introduced ETF and is not an offer or invitation to make an application to invest in this fund. All statutory requirements concerning impartiality of financial analysis are unaffected. A prohibition of trading concerning mentioned financial products before publishing this document does not exist. This document replaces neither a professional investment advice nor a relevant public prospectus or any actual semi-annual and annual reports. It is not an offer for subscription. This document is only directed to persons who have a permanent residence in the Federal Republic of Germany. It is not determined to addressees in any other jurisdictions or to citizens of the USA. This document is only intended for the recipient. The document or parts of it may not be disclosed to any third party or used for any other purpose without prior written consent. This document is based on information obtained from sources we believe to be reliable but which have not been independently verified; therefore we accept no responsibility for accuracy and/or completeness. The ETF is not suitable for every investor. It can not be excluded that an investment in the fund could lead to losses for the investor.it is also possible that an investor might lose all of its initial investment as well as possible amendments. All information within this document do neither replace the official legal documents for the fund nor the simplified prospectuses respectively the Key Investor Information Documents and the most recent annual and semi-annual reports. Actual Prospectuses, Key Investor Information Documents and the latest annual and semiannual reports can be obtained upon request and free of charge from HSBC Trinkaus & Burkhardt AG, Koenigsallee 21/23, Duesseldorf, Germany. They are also available on the internet via * Note for investors in Germany: It should be noted that for the Sub-Fund HSBC FTSE 250 no notification has been filed according to 132 Investment Act and that the Shares of this Sub-Fund may not be publicly distributed to investors within the scope of applicability of the Investment Act. For investors in the UK All applications are made on the basis of the current HSBC ETFs plc Prospectus, relevant Key Investor Information Document ( KIID ), Supplementary Information Document (SID) and Fund supplement, and most recent annual and semi-annual reports, which can be obtained upon request free of charge from HSBC Global Asset Management (UK) Limited, 8 Canada Square, Canary Wharf, London, E14 5HQ. UK, or from a stockbroker or financial adviser. Investors and potential investors should read and note the risk warnings in the prospectus, relevant KIID, SID and Fund supplement. UK-based investors in HSBC ETFs plc are advised that they may not be afforded some of the protections conveyed by the Financial Services and Markets Act (2000), ( the Act ). The company is recognised in the United Kingdom by the Financial Conduct Authority under section 264 of the Act. For investors in Switzerland The HSBC EURO STOXX 50, HSBC FTSE 100, HSBC MSCI BRAZIL, HSBC EMERGING MARKETS, HSBC MSCI EM FAR EAST, HSBC MSCI EUROPE, HSBC MSCI JAPAN UCITS ETF, HSBC MSCI PACIFIC ex JAPAN, HSBC MSCI TURKEY, HSBC MSCI USA, HSBC MSCI WORLD, HSBC S&P 500, HSBC S&P BRIC 40, HSBC MSCI CHINA, HSBC MSCI SOUTH AFRICA, HSBC MSCI CANADA UCITS ETF, HSBC MSCI MEXICO CAPPED, HSBC MSCI EM LATIN AMERICA, HSBC MSCI TAIWAN UCITS ETF, HSBC MSCI INDONESIA, HSBC MSCI KOREA, HSBC MSCI MALAYSIA and HSBC MSCI RUSSIA CAPPED are registered in Switzerland in the meaning of Art.120 of the Federal Collective Investment Scheme and can therefore be distributed publicly in or from Switzerland. The prospectus, Key Investor Information Document (KIID) of the afore mentioned sub-fund and (semi-) annual reports of the Company can be obtained free of charge at the Swiss office of the Swiss representative of the fund: ACOLIN Fund Services AG, Stadelhoferstrasse 18, CH-8001 Zurich. Paying agent in Switzerland: HSBC Private Bank (Suisse) S.A., Quai Général Guisan 2, P.O. Box 3580, 1211 Geneva 3. All other funds mentioned in this document have not (yet) been authorised for public distribution in Switzerland. This material must therefore exclusively be directed towards qualified investors in the meaning of Art. 10 para. 3 of the Federal Collective Investment Schemes Act. There are risks involved with this type of investment. Please refer to the prospectus for general risk factors, and to the KIID for specific risk factors. 8

10 Restrictions The shares in HSBC ETFs plc have not been and will not be offered for sale or sold in the United States of America, its territories or possessions and all areas subject to its jurisdiction, or to United States persons. Affiliated companies of HSBC Global Asset Management (UK) Limited may make markets in HSBC ETFs plc. Index disclaimer: The EURO STOXX 50 is the intellectual property (including registered trademarks) of Stoxx Limited, Zurich, Switzerland and/or Dow Jones & Company, Inc., a Delaware corporation, New York, USA, (the Licensors ), which is used under license. The securities based on the Index are in no way sponsored, endorsed, sold or promoted by the Licensors and neither of the Licensors shall have any liability with respect thereto. All rights in the FTSE 100 and the FTSE 250 (the Indices ) vest in FTSE International Limited ( FTSE ). FTSE is a trademark of London Stock Exchange Group companies and is used by FTSE under licence. The HSBC FTSE 100 and the HSBC FTSE 250 (the Products ) have been developed solely by HSBC Global Asset Management (UK) Limited. The Indices are calculated by FTSE or its agent. FTSE and its licensors are not connected to and do not sponsor, advise, recommend, endorse or promote the Products and do not accept any liability whatsoever to any person arising out of (a) the use of, reliance on or any error in the Indices or (b) investment in or operation of the Products. FTSE makes no claim, prediction, warranty or representation either as to the results to be obtained from the Products or the suitability of the Indices for the purpose to which they are being put by HSBC Global Asset Management (UK) Limited. FTSE is a trade mark of the London Stock Exchange Group companies, NAREIT is a trade mark of the National Association of Real Estate Investment Trusts ( NAREIT ) and EPRA is a trade mark of the European Public Real Estate Association ( EPRA ) and all are used by FTSE International Limited ( FTSE ) under licence). The FTSE EPRA/NAREIT Developed Index is calculated by FTSE. Neither FTSE, Euronext N.V., NAREIT nor EPRA sponsor, endorse or promote this product and are not in any way connected to it and do not accept any liability. The funds or securities referred to herein are not sponsored, endorsed, or promoted by MSCI, and MSCI bears no liability with respect to any such funds or securities or any index on which such funds or securities are based. The Supplement to the Prospectus contains a more detailed description of the limited relationship MSCI has with HSBC ETFs plc and any related funds. Standard & Poor s and S&P are registered trademarks of Standard & Poor s Financial Services LLC ( S&P ) and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC ( Dow Jones ) and have been licensed for use by S&P Dow Jones Indices LLC and sublicensed for certain purposes by HSBC Global Asset Management (UK) Limited. The S&P 500 and the S&P BRIC 40 are products of S&P Dow Jones Indices LLC, and have been licensed for use by HSBC Global Asset Management (UK) Limited. HSBC Global Asset Management (UK) Limited s HSBC S&P 500 UCITS ETF and HSBC S&P BRIC 40 are not sponsored, endorsed, sold or promoted by S&P Dow Jones Indices LLC, Dow Jones, S&P, their respective affiliates, and neither S&P Dow Jones Indices LLC, Dow Jones, S&P, their respective affiliates make any representation regarding the advisability of investing in such product(s). To help improve our services and in the interests of security, we may record and/or monitor your communications with us. HSBC Global Asset Management (UK) Limited provides information to institutions, professional advisers and their clients on the investment products and services of the HSBC Group. This document is approved for issue in the UK by HSBC Global Asset Management (UK) Limited, who are authorised and regulated by the Financial Conduct Authority. HSBC Global Asset Management (UK) Limited provides information to institutions, professional advisers and their clients on the investment products and services of the HSBC Group. Copyright HSBC Global Asset Management (UK) Limited All rights reserved a-FP expiry 13/09/2014 9

11 Further information on HSBC ETFs For investors in the UK Tel: +44 (0) For investors in Switzerland Tel: For investors in Germany Tel: +49 (0) For investors in France Tel: hsbc.client.services-am@hsbc.fr Bloomberg: MSG ETF HSBC <GO> To help improve our services and in the interests of security, we may record and/or monitor your communications with us. Designed and produced by HSBC Global Publishing Services_140128_52817