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HSBC Fund Seeks Firms Tackling Climate Change

Thu Jan 17, 2008 12:29pm GMT – Reuters

By Tom Miles

HONG KONG (Reuters) – HSBC Holdings launched a climate change fund on Thursday to give investors a chance to turn a threat into an opportunity by buying into the increasing number of firms trying to tackle global warming.

“As recently as five years ago, who talked about climate change? Very few people. It was fashionable to be sceptical… It seems the tide has turned quite significantly,” said Patrice Conxicoeur, chief executive of SINOPIA, the quantitative investment arm of the global bank, which will manage the fund.

“The market has taken notice,” he told a news conference to launch the fund.

The fund, “HSBC Global Investment Funds – Climate Change” will aim to outperform HSBC’s own climate change benchmark index by 3 percent per year, which the bank said had shown a 164 percent return since January 1, 2004.

“In terms of return profile, I think this should generate for our investors returns which are commensurate with the type of returns they would expect from investing in emerging companies,” said Conxicoeur.

“Clearly it’s an emerging industry and an emerging theme… It’s not going away. Even if all those companies come up with very nice solutions overnight – which is not going to happen, it’s going to be a long slog.”

The fund, which opened to Hong Kong retail investors on Thursday and is expected to be available globally, will target 50-70 of the 300 companies in the benchmark index.

It will invest in three areas: producers of low carbon energy including renewables, gas and nuclear; firms with energy-efficient products such as fuel cells and insulation; and companies dealing with water, waste and pollution control.

Potential investments might be firms such as environmentally friendly battery maker BYD Co Ltd, solar cell manufacturer Q-Cells AG and water firm Veolia Environnement SA, Conxicoeur said.

The make-up of the index, and therefore the fund’s portfolio, would change over time to reflect development of the sector, potentially adding stocks such as companies building flood defenses and specialized financial firms, he said.