Asset Manager Overview
HSBC Global Asset Management is the asset management arm of HSBC Holdings plc (HSBC Group). The HSBC Group is one of the largest banking and financial services organizations in the world, with operations in Europe, Asia Pacific, the Americas, the Middle East, and Africa.
HSBC has been conducting investment management services since 1973. In 1994, HSBC Asset Management was established when HSBC's regional asset management companies were brought together into a single business. The business is responsible for managing over $750 billion in assets globally.
Fund Manager/Team Overview
The equity and fixed income funds at HSBC are managed by two separate teams, each with expertise in their respective asset classes. The equity team manages over $150 billion in assets globally across Index & Systematic funds.
In October 2025 Patricia Keogh was promoted to Head of Passive Equity. Patricia has been at HSBC since 2013 and has over 25 years of investment experience. She is supported by a team of eight portfolio managers who collectively have extensive experience in passive investing.
Investment Philosophy & Process Overview
The fund invests in physical securities and follows a full replication approach. A full replication approach, as the name suggests, involves purchasing all the securities in the same weights as they are represented in the index. In principle, this sounds very straightforward, but there are subtle differences in the way corporate actions, such as dividends and changes to the index composition, are handled. The impact of these differences on performance is small, and this is captured in our analysis of the fund's returns.
This approach, gross of fees, can provide the highest degree of accuracy in tracking the fund's benchmark. However, it can also involve higher transaction costs compared to other methods and is therefore more suitable for liquid markets.
The fund is priced and traded at 12:00pm. If the underlying market is closed, a fair pricing adjustment may be applied to align the fund with the expected price of the tracked index. Most of the time, fair value adjustments have no material impact on the fund's pricing operations. However, occasionally, when a market is closed, an event may occur that would materially impact prices. This was the case in February 2022 when Russia's invasion of Ukraine led to the suspension of all Russian stocks to international investors. Therefore, a fair price adjustment was applied by valuing all Russian securities at zero.
The fund is priced at a different time than the benchmark, which can slightly increase the tracking error and lead to notable differences in performance if there are market moves between when the fund and the benchmark are priced. This difference should then be eradicated the following day.
The fund can engage in stock lending activities, but no more than 20% of the fund's NAV can be on loan at any point in time. Stock lending involves lending securities to another party and receiving income in return. Trades are typically conducted with another entity, usually an investment bank, which introduces counterparty risk—the risk that the other party in the deal may renege on their agreement and fail to repay the stock in full. Stock lending is undertaken by HSBC Bank plc, which is a different entity from the managers of the fund, HSBC Global Asset Management.
Square Mile believes that HSBC has strong risk controls in place to protect the fund in the event of a default, and that the risk of loss to investors is remote. HSBC requires any borrower to provide collateral in excess of the value of the stock borrowed. This collateral can be in the form of cash, equities, or government debt. If the counterparty were to default on its obligations, HSBC Bank plc themselves would indemnify the fund from any loss.
The fund benefits from the income generated through stock lending, with at least 75% of the gross income returned to the fund. The impact on performance from stock lending tends to be limited.