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The fund is designed to replicate the performance of the MSCI AC Far East Ex Japan Index, a market capitalisation-weighted index that tracks the performance of large and mid-cap companies across both emerging and developed Far East Asia.
With 536 constituents, the index covers approximately 85% of the free float-adjusted market capitalisation in each of nine countries within the index universe.
The index is reviewed quarterly – in February, May, August and November – with the objective of reflecting change in the underlying equity markets in a timely manner, while limiting undue index turnover.
China and South Korea currently have the largest country weights with 27.12% and 21.92%, respectively. Financials is the largest sector with 33.06%, followed by information technology (19.23%), consumer discretionary (10.20%), industrials (9.06%) and telecommunication services (7.01%).
In terms of individual constituents, major companies include Samsung Electronics, Taiwan Semiconductor, China Mobile, AIA Group and China Construction Bank.
Commenting on the launch, Phil Reid, Head of EMEA ETF Distribution at HSBC Global Asset Management, said: “The MSCI AC Far East Ex Japan index is an important index providing diversified exposure to the potential growth areas of China (as accessible by the Hong Kong market), Hong Kong, Indonesia, Korea, Malaysia, Philippines, Singapore, Taiwan and Thailand.”
He added: “HSBC already offers physical exposure to the Asian markets through other ETFs in its range. This recent launch meets client demand and further expands the available choice for investors seeking exposure to these important markets.”
The fund tracks its index via an optimised physical replication methodology. This means that the fund physically holds a sample of securities that constitute the index, optimised to ensure cost-efficient tracking.
The fund is domiciled in Ireland and is available in GBP, EUR and USD trading lines. Like all HSBC ETFs, it will be registered in several European countries, including the UK, France, Germany, Ireland, Netherlands, Spain, Sweden and Austria.
With a Total Expense Ratio (TER) of 0.60%, the fund has been priced competitively in an effort to gather assets. This compares favourably with the iShares MSCI AC Far East ex-Japan UCITS ETF (IFFF), the largest fund in the peer group, which comes with a TER of 0.74%
The rival iShares fund launched in October 2005 and is listed on the London Stock Exchange, Borsa Italiana, Deutsche Börse, NYSE Euronext Amsterdam, NYSE Euronext Paris and SIX Swiss Exchange. It has more than $2.4 billion in assets under management.
In a separate development, HSBC has announced a major expansion of its ETF line-up in Germany, unveiling plans to list a further 15 emerging and developed market ETFs on the Deutsche Börse.
(Data as of 30 August 2013)