HSBC Real Economy Green Investment Opportunity Global Emerging Market (REGIO)

Investment Objective

The UN-sponsored Sustainable Development Goals (SDGs) and Paris Climate Agreement set a long-term transformational framework for the global economy with meaningful investor consequences if they fail to deliver.

Emerging markets have an urgent need to attract investment to tackle climate-change mitigation and adaptation to meet these goals. However, these markets are more likely to suffer the cost of climate change whilst being less able to self-finance solutions. This means that investors are exposed directly and indirectly to climate and sustainability risks across the financial system and in emerging markets in particular.

Investment opportunity

HSBC Asset Management, together with leading Development Finance Institutions (DFIs), have created an innovative investment solution to these challenges. REGIO will seek to:

• Invest in a diversified portfolio primarily comprised of emerging market green bonds and other similar bonds, principally issued by corporate issuers, on a buy-and- maintain basis
• Deliver real economy impact in primarily lower Gross National Income (GNI) countries
• Enable investors to achieve long-term, sustainable returns, whilst delivering on broader climate and environmental objectives in line with the SDGs and Paris Climate Agreement

HSBC Asset Management strengths

Emerging markets are part of our corporate DNA and we have one of the longest track records in the EMD universe, dating back to 1998.

• A global investment platform allows us to leverage the insights and local knowledge of our on-the-ground network of analysts and investment professionals from across the world
• EMD capabilities range from US dollar-denominated sovereign, quasi-sovereign and corporate bonds to local currency-denominated debt and local FX. We offer both benchmarked and total return strategies in this space

For more information or to discuss your investment strategy, contact us.

Risks in consideration

There is no assurance that a portfolio will achieve its investment objective or will work under all market conditions. The value of investments may go down as well as up and you may not get back the amount originally invested. Portfolios may be subject to certain additional risks, which should be considered carefully along with their investment objectives and fees.

• Fixed income is subject to credit and interest rate risk. Credit risk refers to the ability of an issuer to make timely payments of interest and principal. Interest rate risk refers to fluctuations in the value of a fixed income security that result from changes in the general level of interest rates. In a declining interest rate environment, a portfolio may generate less income. In a rising interest-rate environment, bond prices fall
• High Yield Investments in high yield securities (commonly referred to as “junk bonds”) are often considered speculative investments and have significantly higher credit risk than investment grade securities. The prices of high yield securities, which may be less liquid than higher rated securities, may be more volatile and more vulnerable to adverse market, economic or political conditions
• Foreign and emerging markets Investments in foreign markets involve risks such as currency rate fluctuations, potential differences in accounting and taxation policies, as well as possible political, economic, and market risks. These risks are heightened for investments in emerging markets which are also subject to greater illiquidity and volatility than developed foreign markets
• Derivative instruments Derivatives can be illiquid, may disproportionately increase losses and may have a potentially large negative impact on performance

Find out more about Responsible investing