HSBC launches innovative ‘active quant’ climate change fund

HSBC Investments is to launch the HSBC Climate Change fund on 9 November 2007, subject to regulatory approval.

The fund will invest in companies that are considered best placed to benefit from addressing, combating and developing solutions to the challenges presented by climate change.

It will be managed by SINOPIA, the active quantitative specialist of the HSBC Group, and will aim to outperform the HSBC Global Climate Change index, which was launched on 25 September 2007. Since January 2004, the HSBC Global Climate Change index has delivered a return of 125%, based on internal back testing, outperforming the MSCI World index by almost 70%.

The HSBC Climate Change fund will be part of HSBC's flagship Luxembourg-based Global Investment Funds SICAV, which is available for sale in 35 countries worldwide and has UK distributor status. Retail and institutional share classes will be offered with minimum investment amounts of US$5,000 and US$1 million respectively. The annual management charge is 1.5% for the retail share class and 0.75% for the institutional share class. Share classes are denominated in US dollars, euro, sterling and Singapore dollars.

Farley Thomas, Global Head of Wholesale at HSBC Investments said: "HSBC considers climate change to be one of the biggest investment themes for the foreseeable future. In launching this fund, our aim is to offer investors greater choice when aiming to capture climate change opportunities. Our active quant approach to climate change investing is innovative and HSBC Investments is pleased to be the first to use the new HSBC Global Climate Change index as a public mutual fund benchmark."

SINOPIA will use its active quant stock selection models to score stocks in the index based on a number of criteria including relative valuation, earnings momentum, price volatility and econometric analysis. Based on this scoring, and prevailing stock liquidity and market capitalisation, the fund will invest in around 60 companies that are considered most promising in terms of expected returns.

Stephen Green, Group Chairman of HSBC Holdings plc, said: "Climate change is an issue affecting all of us, creating risks and opportunities that we must address at various levels. The launch of the HSBC Climate Change fund complements several other initiatives sponsored by HSBC, including the recent launch of the HSBC Global Climate Change Index. This underscores HSBC’s commitment to offering practical climate change investment solutions to our clients."

The HSBC Global Climate Change index was launched on 25 September 2007 by HSBC Global Research, which aims to be a leading provider of analysis on the investment implications of climate change. Building on its track record of specialist equity research on alternative energy stocks, HSBC has established a new Climate Change Centre of Excellence to undertake cutting-edge analysis on critical climate change issues. In line with HSBC's wider strategy, the Climate Change Centre will focus on the commercial consequences of climate change in emerging markets.

Structured products based on the new fund and the HSBC Global Climate Change investable index family are also being developed by HSBC Global Markets in partnership with HSBC Investments.