A press release entitled, "Moody's assigns Aaa-mf rating to HSBC US Dollar ESG Liquidity Fund," tells us, "Moody's Investors Service has assigned an Aaa-mf rating to HSBC US Dollar ESG Liquidity Fund, a new low volatility net asset value money market fund, domiciled in Ireland and managed by HSBC Global Asset Management (USA) Inc. This Fund is classified as Article 8 under the European Union Sustainable Finance Disclosures Regulation and must, as such, promote environmental or social characteristics. The Fund's primary investment objective will be to maintain the principal and to provide shareholders with daily liquidity with an income which is comparable to US Dollar denominated short dated money market interest rates." Moody's explains, "The Aaa-mf rating reflects Moody's view that the Fund will have a strong ability to meet its objectives of providing liquidity and preserving capital. This view is supported by the model portfolio's high scores for each of the key rating factors, including credit quality, asset profile, liquidity and exposure to market risk. The Fund will invest in a diversified portfolio of short-term securities, instruments and obligations which are of high quality at the time of purchase, with an additional focus on the performance of the underlying issuers on a range of ESG (environmental, social, governance) metrics. HSBC Global Asset Management (USA) Inc., the Fund advisor, determines an ESG score for each issuer in the universe, made up of individual E, S and G scores and weighted based on a proprietary model. The Fund's eligible investment universe will be limited to issuers that score in the top three quartiles based on the aggregate ESG score, while the issuers in the bottom decile for each individual component of E, S and G will also be excluded. The Fund's weighted average maturity will be below 60 days and we expect the Fund to maintain a strong liquidity profile supported by high levels of overnight and weekly liquidity in the portfolio. As a result, we expect the Fund to have a very low exposure to market risk." The release adds, "The rating agency expects the Fund will be managed in line with the model portfolio. However, Moody's notes that if the Fund's investment portfolio was to deviate materially from the model portfolio, the Fund's rating could be changed. The Fund will be launched on 12 October 2022. It will operate under the low volatility net asset value (LVNAV) fund structure domiciled in Ireland and offer a same day settlement. Moody's expects modest shareholder concentration risk during the Fund's ramp-up period to diminish as the Fund grows in size and its shareholder base diversifies. HSBC Global Asset Management (USA) Inc., the fund's investment advisor, is part of the asset management business of HSBC Holdings plc that had $595 billion in assets under management worldwide as of 30 June 2022, of which about $146 billion are invested in liquidity funds."
