HSBC Asset Management launches sustainable healthcare fund

HSBC Asset Management (HSBC AM) has announced the launch of the HSBC GIF Global Equity Sustainable Healthcare Fund, the firm’s first healthcare fund focused on sustainability and impact. The fund will be co-managed by Dr. Nathalie Flury and Dr. Michael Schröter, Co-Heads of Sustainable Healthcare Equity, who both joined HSBC AM in Switzerland earlier this year.

One of the main sustainability challenges facing the healthcare sector today is cost. As medical costs continue to grow, a basic social need becomes increasingly inaccessible to much of the population. The fund, which is aligned with UN SDG Goal 3, Good Health & Wellbeing, aims to address this challenge and drive social impact without sacrificing on performance. The fund will be fully ESG integrated and invest in a range of 35-40 companies with a bias towards mid-caps, long-term engagement, low turnover and active management interactions. These companies will have both a clinical benefit and cost savings focus, and aim to make healthcare more affordable. There will be no fixed allocations across geographies, sub-subsectors, company stages, and/or profitability.

Dr. Nathalie Flury and Dr. Michael Schröter, Co-Heads of Sustainable Healthcare Equity, said: “The current healthcare model is not sustainable and patient outcomes are being negatively impacted alongside the industry and investors. This fund aims to address this inequality and invest in companies that are offering different approaches through new treatment options, technology and innovative business models.”

As healthcare spending consistently outpaces GDP growth across markets, rising costs are straining healthcare systems globally which results in access restrictions. In 2018, global spending on healthcare reached USD 8.3 trillion, or 10% of global GDP . In the US, which accounts for nearly half (42%) of global healthcare expenditure total spend is projected to increase by over 50% in the next eight years alone .

Investing in companies that focus on healthcare innovation can reduce the overall cost for all stakeholders in the system (below). Companies that create new treatments, devices, diagnostics, digital-health and services can all play their part in achieving this.

•  Payers, for example insurers, stay within budget while ensuring quality care for their covered population
• Doctors have no prescription restrictions imposed by payers
• Patients have access to best suited treatments for their disease
• Industry, for example healthcare companies, recovering R&D investments plus profit
• Investors are appropriately rewarded

Patrice Conxicoeur, Chief Executive Officer, Southeast Asia, HSBC Asset Management, said “As a leading global asset manager with a strong commitment to sustainability, we have a responsibility to not only help clients achieve their long-term financial objectives but also channel capital towards a more sustainable future. The launch of the HSBC GIF Sustainable Healthcare Fund highlights our dedication to delivering relevant responsible investment solutions that provide value for investors and create a positive impact for society.”

In 2020, HSBC AM set out its strategy to re-position its business as a core solutions and specialist emerging markets, Asia and alternatives focused asset manager, with client centricity, investment excellence and sustainable investing as key enablers. As part of its investment strategy, the firm continues to incorporate environmental, social and governance (ESG) factors into its investment process and deliver innovative solutions to generate sustainable, long-term returns for investors to meet their sustainable investment objectives and support the sustainable development goals.

The HSBC GIF Global Equity Sustainable Healthcare Fund will be distributed by HSBC Singapore to its Private Banking clients from 28 July 2021 and subsequently to all retail banking customers by end of this quarter.