HSBC Islamic Global Equity

What is the HSBC Islamic Global Equity Fund?

This is a passively managed equity fund. Instead of trying to beat the market, it aims to mirror the performance of its benchmark index. That means when you invest here, you’re putting your money into some of the world’s largest and most successful companies, but only those that are Shariah-compliant.

How Does the HSBC Global Islamic Fund Work?

Here’s how the HSBC Global Islamic Equity Index Fund works —

1. Index Tracking:The fund invests in shares of companies in the same proportion as the Index.
2. Shariah Screening: Companies are filtered based on:
   • Business activities (no alcohol, gambling, interest-based finance, etc.)
   • Financial ratios to ensure compliance.
3. Shariah Oversight: A Shariah Committee supervises the fund, monitors it throughout the year, and issues an annual Shariah compliance certificate.
4. No Derivatives: The fund does not invest in derivatives or other complex instruments.

Key Features of the HSBC Islamic Global Equity Fund

Here are the reasons why this fund stands out among the investors —

• Shariah Compliance: The fund ensures all investments align with Islamic finance principles, avoiding industries such as alcohol, gambling, and interest-based financial services
• Global Diversification: By investing in a wide range of sectors and regions, the fund provides exposure to various markets, enhancing potential returns and spreading risk
• Full Replication Strategy: This fund aims to mirror the performance of its benchmark index by investing in all its constituents in the same proportions, ensuring accurate tracking
• Low Costs: It maintains a competitive cost structure, with an ongoing charge figure of just 0.27%, making it an efficient investment choice
• Strong Growth: Assets under management (AUM) have grown to over USD 5 billion since launch in November 2022.

HSBC Global Islamic Fund Performance Overview

The HSBC Islamic Global Equity Fund has delivered strong returns over the years. Below is a summary of its performance —

Note: The past performance of HSBC Islamic Global Equity Index fund does not predict future returns. Returns are calculated in the fund’s base currency and may fluctuate due to exchange rate movements.

Fees and Fund Details

• Minimum Initial Investment: USD 5,000
• Ongoing Charge Figure: 0.619% (covers annual management costs but excludes transaction costs)
• Inception Date: 26 April 2021
• Fund Size: USD 2.08 billion

Example of Fees Impact: If you invest USD 10,000 for 5 years with an expected 5% return per year:

• Without fees: USD 12,762.82
• After fees: USD 11,487.93

That’s a reduction of about USD 1,274.89, meaning your annual return drops from 5% to 2.8% due to fees.

Top Holdings of HSBC Global Equity Index Fund

The fund invests in some of the world’s leading companies that meet Shariah compliance standards. Here are the top five holdings, accounting for 35.96% of the portfolio —

Key Risks of HSBC Global Islamic Fund

Like any investment, this fund also comes with risks. Some of the main ones are —

• Investment Risk: The value of your investment can go up or down
• Counterparty Risk: Risk if another party in a transaction can’t meet obligations
• Currency Exchange Risk: Since the fund is in USD, fluctuations in currency rates may affect returns
• Index Tracking Risk: The fund may not perfectly match the index performance
• Liquidity Risk: Difficulty in selling assets quickly when needed
• Operational Risk: Errors in accounting, reporting, or transactions may impact the fund
• Shariah Restriction Risk: The fund may perform differently from non-Shariah funds because of its restrictions

⚠️ Note: Past performance does not guarantee future returns.

Considerations for UAE Investors

• Alignment with Values: The fund's adherence to Shariah principles ensures investments are ethical and in line with Islamic values
• Global Exposure: Investors benefit from access to prominent global companies across various sectors, like technology and healthcare, potentially enhancing portfolio growth
• Risk Awareness: As with all equity investments, the fund is subject to market fluctuations. It's essential to consider personal risk tolerance and investment horizons

Conclusion

The HSBC Islamic Global Equity Index Fund presents a viable option for UAE investors seeking Shariah-compliant investment opportunities with a global perspective. By combining ethical considerations with diversification, the fund aims to provide long-term capital appreciation. Prospective investors should assess the fund's alignment with their financial goals and risk appetite.

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