Phoenix Wealth HSBC Islamic Global Equity Index Pn
SRI Style:
Faith Based
SDR Labelling:
Not eligible to use label
Product:
Pension
Fund Region:
Global
Fund Asset Type:
Equity
Launch Date:
01/10/2011
Last Amended:
Apr 2023
Dialshifter (
):
Fund Size:
£45.19m
(as at: 31/12/2024)
ISIN:
GB00B3ZK7932, GB00B3QBZF71, GB00B3NQ6742
Sustainable, Responsible
&/or ESG Overview:
This Pension product is linked to the "HSBC Islamic Global Equity Index" fund. The following information refers to the primary (SICAV) fund.
No response when requested update from manager (August 2024)
HSBC Islamic Global Equity Index Fund adopts a fully-replicated passive equity investment strategy that mirrors and tracks the Dow Jones Islamic Market Titans 100 Net Total Return Index. All stocks in the Dow Jones Islamic Market Index family have passed rules-based screenings for Shariah compliance. To determine their eligibility for the indices, stocks are screened to ensure they meet the standards in the published S&P Dow Jones methodology.
Our approach to managing index funds has two equally important objectives: close tracking and minimising costs; achieved through our people, our diligent processes and our robust proprietary technology.
Primary fund last amended:
Apr 2023
Information directly from fund manager.
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Fund Management Company Information
About The Business
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A member of the Taskforce for Nature Related Financial Disclosures group which aims to aid risk management and shift money towards nature-positive outcomes.
Resources
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Engagement Approach
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Company Wide Exclusions
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Sustainable, Responsible &/or ESG Policy:
The Fund aims to create long-term appreciation of capital through investment in a well-diversified portfolio of securities, which meet Islamic investment principles. It draws on the expertise of HSBC’s specialist Index & Systematic Equity Portfolio Management team, whose process and strategy are designed to deliver index returns, whilst minimising trading costs and tracking error risk.
The Dow Jones Shariah Supervisory Board is a board of four Islamic scholars who define the overall rules governing the Shariah screening that stocks must satisfy to be included in the index.
In addition, the index provider S&P Dow Jones has contracted with Ratings Intelligence Partners, a London/Kuwait based third-party Shariah consultancy that was established in 2000 to develop leading-edge solutions for the global Islamic investment market. This consultancy is responsible for applying the screens/filters on the different stocks, as defined by the Shariah Supervisory Board.
In managing an index portfolio, we use the most appropriate tracking technique depending on the structure of the index and the asset size of the portfolio. We tend to favour what we term ‘responsible’ replication, which means that we look to minimise costs wherever possible around implementation. This philosophy helps us navigate well-known pricing anomalies such as index changes or corporate events, where prices can be squeezed higher or lower than under normal trading conditions. This approach typically is successful for major indices where there is a significant amount of assets tracking the indices.
For the HSBC Islamic Global Equity Index fund, we aim to fully replicate the index, holding every security in the index at the appropriate weightings. When the index undergoes a change, so too does the fund. This approach seeks to reduce tracking error.
Process:
The investment process for the HSBC Islamic Global Equity Index fund requires a customisation overlay to ensure it complies with Shariah Laws. In order to better illustrate this, we divide the investment process into two components, one focusing on Shariah compliance and the other one on the index replication process within the Shariah Law parameters. Both components interact closely to ensure that the fund fully meets its investment objectives within the parameters set by Shariah compliance.
Each process is outlined separately below with further details of the investment team and the fund’s Shariah Committee as key players in this process.
Shariah Compliance
There is a rigorous investment process to ensure adherence to Shariah principles, which the HSBC Asset Management Shariah Committee closely monitors. The committee has approved investment in listed companies whose activities do not contravene the tenets of Islam and where any non-Shariah compliant revenue that might be earned is ‘purified’.
Stage 1: screening potential investments
Shariah compliance is vital to maintain the quality of our business and our clients’ trust. The Shariah Committee is responsible for the following activities:
- Study of the prospectus, investment objectives and policies
- Use of Investment Techniques and Instruments
- Advising the Board of Directors regarding compliance with Shariah principles
- Establishing principles for calculating an appropriate percentage of impure income
- Approving proposals for the nomination of suitable charities to which the impure income will be donated
- Preparing and annual certification with Shariah principles for inclusion in the financial reports
Shariah compliance is vital to maintain the quality of our business and our customers’ trust
The Shariah Committee monitors the fund throughout the year and issues an annual Shariah certificate on the fund’s compliance with Shariah principles. This certificate is included in the annual financial report of the fund as a confirmation of the Shariah compliance for that year.
Stage 2: income purification
The fund receives company dividends generated as part of a company’s normal business operations. However, a large diversified corporation may be Shariah-compliant but may generate a small part (must be less than 5%) of their revenue from non-compliant activities hence the need for a purification cost.
Purification costs – summary
- Dividend purification cost ratio. This ratio is calculated for purification purpose as:
Non-permissible revenue/total revenue
- Purification costs are calculated on an annual basis. This ratio is then applied to the dividend income received from the companies to arrive at the impure income for each company included in the portfolio.
- The methodology for calculations is reviewed and approved by the Shariah Committee.
- The ratio of impure income varies from company to company and portfolio to portfolio (depending on the composition of the portfolio). It can typically range from 1.0% to 5.0% of the dividend income of a fund's holdings.
- From 2021 onwards, the fund will gift the impure income calculated from this process to BBC Children in Need. BBC Children in Need are currently supporting over 3,900 local charities and projects in communities across the UK to help children facing a range of disadvantages for example poverty and deprivation; children who have been the victims of abuse or neglect or disabled young people. In line with the theme of the fund, the money gifted will be directed to local charities and projects focused on specifically helping BAME/Muslim communities in the UK where children may be facing issues such as racism, poor English language skills and lack of support for asylum seekers, refugees and migrants.
Portfolio Construction – Implementation
In managing an index portfolio, we use the most appropriate tracking technique depending on the structure of the index and the asset size of the portfolio. We tend to favour what we term ‘responsible’ replication, which means that we look to minimise costs wherever possible around implementation. This philosophy helps us navigate well-known pricing anomalies such as index changes or corporate events, where prices can be squeezed higher or lower than under normal trading conditions.
As part of our rebalancing process we identify those stocks being traded during the rebalance and any other major trading activity that may influence the price behaviour, for example other major index provider rebalances. When a stock is identified as being subject to major trading activity at the same point in time, we may diversify our trade implementation strategy based on timing, risk and execution strategy, in order to avoid those rebalance points that are typically driven by stock-specific demand or supply anomalies that can adversely affect prices. Our primary aim in implementing changes to the index is to minimise the effect of changes in the price and to add value for our clients, whilst staying within our tracking error budgets.
Index Rebalance Review Process
Our approach to managing the index/model rebalancing process consists of the following:
- Pre-trade analysis
- Trading strategy
- Investment team review
- Execution
- Continuous review
- Evolve strategy
- Execution
Banned Weapons Screening
Across all strategies managed by HSBC Asset Management we exclude investments in companies linked to banned weapons. The weapons exclusion policy is based on international treaties and conventions and covers third parties involved directly in the use, development, manufacturing, stockpiling, transfer of or trade of banned weapons. Such weapons include:
- Anti-personnel mines
- Biological weapons
- Blinding laser weapons
- Chemical weapons
- Cluster munitions
- Non-detectable fragments
We use recognized independent third-party research from specialist providers to identify companies that are involved in banned weapons production. These securities are then added to our list of investment restrictions applied throughout HSBC Asset Management.
In our indexation strategies, the weapons exclusions currently have a minor performance/tracking impact.
In our HSBC Islamic Global Equity Index Fund, the firm-wide banned weapons policy has limited impact as the weapons sector is already excluded by Dow Jones in the index composition.
Resources, Affiliations & Corporate Strategies:
HSBC Asset Management was an early PRI signatory in 2006. As a signatory of the PRI, we work with other investors in leading engagement on a range of issues. We report annually on our responsible investment activities and how UN PRI principles and different ESG aspects are covered as part of our investment processes. We achieved a PRI score of A+ in the 2018, 2019 and 2020 PRI Assessment Report for Strategy and Governance.
In 2010 we made the decision to move our dedicated ESG analysts into our mainstream equity and credit analyst teams in order to further integrate ESG into our mainstream investment processes. Since then, ESG assessments are a core responsibility of all of our portfolio managers and analysts. Our company and issuer level ESG research is undertaken throughout our organisation. All investment staff have sustainable investment responsibilities as part of their investment duties. ESG integration is a core task of all of our equity and credit analysts. The analysts use the research output of our Paris-based ESG research team in their portfolio research and analysis and portfolio managers include ESG considerations within their investment decision-making processes.
We have a dedicated responsible investment specialist team based in London and Paris. Their responsibilities cover our global Responsible Investment strategy and policy as well as the development of investment solutions for our global clients and Responsible Investment implementation. The team also plays an active role in industry engagement and policy and market initiatives to address systemic sustainability challenges. They work very closely with our corporate governance and engagement team based in London and with our ESG research team based in Paris and they work with our portfolio managers and ESG analysts on systemic ESG issues that require system level solutions through market policy and regulation.
We also have a Stewardship team, with members based in London, Paris and Hong Kong, and who work very closely with our investment managers when undertaking our stewardship activities.
We take into account all available company data including ESG factors when making investment decisions across all asset classes and strategies using in-house financial analysis, third party research and data as well as information gathered from company engagement. In addition to our own research we also use third party research and data from the following providers:
- MSCI ESG Research: Intangible Value ESG Assessment, comprehensive ESG assessment and Financial Crime Compliance screening. We use MSCI because their wide coverage of issuers and sector specific methodology
- ISS ESG (formerly ISS Ethix and ISS Oekom): Identifying issuers involved in the production and/or marketing of controversial banned weapons such as cluster munitions and landmine and government bonds' environmental and societal assessment. The specificity of our banned weapons definition can be implemented by ISS as one of the only providers covering government bonds
- Trucost Research: Quantitative environmental data to measure the carbon footprint of companies, issuers and our funds
- Sustainalytics: UNGC compliance and revenues from controversial and sustainable products and activities
- RepRisk: Tracking companies' reputational risk and involvement in ESG-related controversies (implementation in progress). Provides an ongoing view of issuer’s ESG performance, risks, and controversies
- FTSE Green Revenues: Provides revenues breakdown from green activity and its material impact on the bottom line for approximately 3,000 companies
- Carbon4Finance: Measures “carbon emission savings” to help understand a company’s strategic and financial commitment to a low-carbon transition
Collaborative Engagement
We focus on engagement with investee companies but also engage with stakeholders, regulators, industry partners and academics to inform standards and practices that will benefit the long-term interest of our clients.
A combination of the list below, together with local regulators and industry bodies and other institutions, provides an example of where HSBC Group and HSBC Asset Management have memberships and affiliations:
HSBC Asset Management
- UKSIF (the Sustainable and Finance association)
- AFG (Association Française de Gestion Financière) membre de la commission de Corporate Governance
- ORSE (Observatoire pour la Responsabilité Sociétale des Entreprises)
- ICGN (International Corporate Governance Network)
- Eurosif (the European Sustainable Investment Forum)
- FIR (Forum pour l’Investissement Responsable)
- Italian SIF (Italian Forum for Sustainable Finance)
- PRI (Principles for Responsible Investment)
- IIGCC (Institutional Investor Group on Climate Change)
- UK Stewardship Code
- ACGA (Asian Corporate Governance Association)
- Carbon Disclosure Project (CDP)
- Cambridge Institute of Sustainability leadership- ILG
- Council of Institutional Investors
- Global Climate Action 100+
- One Planet Asset Manager Initiative
- Finance for Biodiversity pledge
- Net Zero Asset Managers’ Initiative
HSBC Group
- UN Environment Programme Finance Initiative (UNEPFI)
- UN Global Compact
- Wolfsberg Principles
- OECD Convention on Combating Bribery
- OECD Guidelines for Multinationals
- International Chamber of Commerce Rules of Conduct to Combat Extortion and Bribery
- Global Sullivan Principles
- UN Universal Declaration of Human Rights
- Equator Principles
- Roundtable on Sustainable Palm Oil
- Global Business Coalition on HIV/AIDS
- Carbon Disclosure Project (CDP)
- Extractive s/industries’ Transparency Initiative
- UN Principles for Sustainable Insurance
- Cambridge Institute of Sustainability leadership – ILG
- Net Zero Banking Alliance
- Powering Past Coal Alliance (PPCA)
SDR Labelling: Not eligible to use label
| Fund Name | SRI Style | SDR Labelling | Product | Region | Asset Type | Launch Date | Last Amended |
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|---|---|---|---|---|---|---|---|---|
Phoenix Wealth HSBC Islamic Global Equity Index Pn |
Faith Based | Not eligible to use label | Pension | Global | Equity | 01/10/2011 | Apr 2023 | |
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Fund Size: £45.19m (as at: 31/12/2024) ISIN: GB00B3ZK7932, GB00B3QBZF71, GB00B3NQ6742 |
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Sustainable, Responsible &/or ESG OverviewThis Pension product is linked to the "HSBC Islamic Global Equity Index" fund. The following information refers to the primary (SICAV) fund. No response when requested update from manager (August 2024)
HSBC Islamic Global Equity Index Fund adopts a fully-replicated passive equity investment strategy that mirrors and tracks the Dow Jones Islamic Market Titans 100 Net Total Return Index. All stocks in the Dow Jones Islamic Market Index family have passed rules-based screenings for Shariah compliance. To determine their eligibility for the indices, stocks are screened to ensure they meet the standards in the published S&P Dow Jones methodology. Our approach to managing index funds has two equally important objectives: close tracking and minimising costs; achieved through our people, our diligent processes and our robust proprietary technology.
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Primary fund last amended: Apr 2023 |
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Information received directly from Fund Manager |
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Controversial weapons avoidance policy (AFM company wide)
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Review(ing) carbon / fossil fuel exposure for all funds (AFM company wide)
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Find companies that publish information about their sustainable and responsible investment strategies on their company website.
Publish full voting record (AFM company wide)
Fund management companies that publish a full record of how they vote their shares at AGMs (annual general meetings) and EGMs (extraordinary general meetings). Voting strategies have an important role to play encouraging higher environmental, social and governance standards. Sustainable, Responsible &/or ESG Policy:The Fund aims to create long-term appreciation of capital through investment in a well-diversified portfolio of securities, which meet Islamic investment principles. It draws on the expertise of HSBC’s specialist Index & Systematic Equity Portfolio Management team, whose process and strategy are designed to deliver index returns, whilst minimising trading costs and tracking error risk. The Dow Jones Shariah Supervisory Board is a board of four Islamic scholars who define the overall rules governing the Shariah screening that stocks must satisfy to be included in the index. In addition, the index provider S&P Dow Jones has contracted with Ratings Intelligence Partners, a London/Kuwait based third-party Shariah consultancy that was established in 2000 to develop leading-edge solutions for the global Islamic investment market. This consultancy is responsible for applying the screens/filters on the different stocks, as defined by the Shariah Supervisory Board. In managing an index portfolio, we use the most appropriate tracking technique depending on the structure of the index and the asset size of the portfolio. We tend to favour what we term ‘responsible’ replication, which means that we look to minimise costs wherever possible around implementation. This philosophy helps us navigate well-known pricing anomalies such as index changes or corporate events, where prices can be squeezed higher or lower than under normal trading conditions. This approach typically is successful for major indices where there is a significant amount of assets tracking the indices. For the HSBC Islamic Global Equity Index fund, we aim to fully replicate the index, holding every security in the index at the appropriate weightings. When the index undergoes a change, so too does the fund. This approach seeks to reduce tracking error. Process:The investment process for the HSBC Islamic Global Equity Index fund requires a customisation overlay to ensure it complies with Shariah Laws. In order to better illustrate this, we divide the investment process into two components, one focusing on Shariah compliance and the other one on the index replication process within the Shariah Law parameters. Both components interact closely to ensure that the fund fully meets its investment objectives within the parameters set by Shariah compliance. Each process is outlined separately below with further details of the investment team and the fund’s Shariah Committee as key players in this process.
Shariah Compliance There is a rigorous investment process to ensure adherence to Shariah principles, which the HSBC Asset Management Shariah Committee closely monitors. The committee has approved investment in listed companies whose activities do not contravene the tenets of Islam and where any non-Shariah compliant revenue that might be earned is ‘purified’. Stage 1: screening potential investments Shariah compliance is vital to maintain the quality of our business and our clients’ trust. The Shariah Committee is responsible for the following activities:
Shariah compliance is vital to maintain the quality of our business and our customers’ trust
The Shariah Committee monitors the fund throughout the year and issues an annual Shariah certificate on the fund’s compliance with Shariah principles. This certificate is included in the annual financial report of the fund as a confirmation of the Shariah compliance for that year.
Stage 2: income purification The fund receives company dividends generated as part of a company’s normal business operations. However, a large diversified corporation may be Shariah-compliant but may generate a small part (must be less than 5%) of their revenue from non-compliant activities hence the need for a purification cost. Purification costs – summary
Non-permissible revenue/total revenue
Portfolio Construction – Implementation In managing an index portfolio, we use the most appropriate tracking technique depending on the structure of the index and the asset size of the portfolio. We tend to favour what we term ‘responsible’ replication, which means that we look to minimise costs wherever possible around implementation. This philosophy helps us navigate well-known pricing anomalies such as index changes or corporate events, where prices can be squeezed higher or lower than under normal trading conditions. As part of our rebalancing process we identify those stocks being traded during the rebalance and any other major trading activity that may influence the price behaviour, for example other major index provider rebalances. When a stock is identified as being subject to major trading activity at the same point in time, we may diversify our trade implementation strategy based on timing, risk and execution strategy, in order to avoid those rebalance points that are typically driven by stock-specific demand or supply anomalies that can adversely affect prices. Our primary aim in implementing changes to the index is to minimise the effect of changes in the price and to add value for our clients, whilst staying within our tracking error budgets.
Index Rebalance Review Process Our approach to managing the index/model rebalancing process consists of the following:
Banned Weapons Screening Across all strategies managed by HSBC Asset Management we exclude investments in companies linked to banned weapons. The weapons exclusion policy is based on international treaties and conventions and covers third parties involved directly in the use, development, manufacturing, stockpiling, transfer of or trade of banned weapons. Such weapons include:
We use recognized independent third-party research from specialist providers to identify companies that are involved in banned weapons production. These securities are then added to our list of investment restrictions applied throughout HSBC Asset Management. In our indexation strategies, the weapons exclusions currently have a minor performance/tracking impact. In our HSBC Islamic Global Equity Index Fund, the firm-wide banned weapons policy has limited impact as the weapons sector is already excluded by Dow Jones in the index composition.
Resources, Affiliations & Corporate Strategies:HSBC Asset Management was an early PRI signatory in 2006. As a signatory of the PRI, we work with other investors in leading engagement on a range of issues. We report annually on our responsible investment activities and how UN PRI principles and different ESG aspects are covered as part of our investment processes. We achieved a PRI score of A+ in the 2018, 2019 and 2020 PRI Assessment Report for Strategy and Governance.
In 2010 we made the decision to move our dedicated ESG analysts into our mainstream equity and credit analyst teams in order to further integrate ESG into our mainstream investment processes. Since then, ESG assessments are a core responsibility of all of our portfolio managers and analysts. Our company and issuer level ESG research is undertaken throughout our organisation. All investment staff have sustainable investment responsibilities as part of their investment duties. ESG integration is a core task of all of our equity and credit analysts. The analysts use the research output of our Paris-based ESG research team in their portfolio research and analysis and portfolio managers include ESG considerations within their investment decision-making processes.
We have a dedicated responsible investment specialist team based in London and Paris. Their responsibilities cover our global Responsible Investment strategy and policy as well as the development of investment solutions for our global clients and Responsible Investment implementation. The team also plays an active role in industry engagement and policy and market initiatives to address systemic sustainability challenges. They work very closely with our corporate governance and engagement team based in London and with our ESG research team based in Paris and they work with our portfolio managers and ESG analysts on systemic ESG issues that require system level solutions through market policy and regulation.
We also have a Stewardship team, with members based in London, Paris and Hong Kong, and who work very closely with our investment managers when undertaking our stewardship activities. We take into account all available company data including ESG factors when making investment decisions across all asset classes and strategies using in-house financial analysis, third party research and data as well as information gathered from company engagement. In addition to our own research we also use third party research and data from the following providers:
Collaborative Engagement We focus on engagement with investee companies but also engage with stakeholders, regulators, industry partners and academics to inform standards and practices that will benefit the long-term interest of our clients. A combination of the list below, together with local regulators and industry bodies and other institutions, provides an example of where HSBC Group and HSBC Asset Management have memberships and affiliations:
HSBC Asset Management
HSBC Group
SDR Labelling: Not eligible to use label |
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