Skip to main content

HSBC Dynamic Fund

Invest Mutual Funds Online

Download Mutual Fund Application Forms

The dynamic environment which we live in today has instinctively made us flexible. We rather prefer to malleable, than rigid given the benefit it has to offer. Assessing the merits of being flexible, today mutual fund houses too are incorporating this aspect as an investment mandate, while managing investors hard earned money. They (mutual fund houses) believe it will help them to manage assets better and improve the overall performance of the fund. There seems to be recognition to the view that, instead of being static in asset allocation (by following a set asset allocation range across asset classes), it is better to go fluid while managing investors hard earned money, as an adverse turn in the equity markets, can prove fatal while managing wealth.

Mandated to follow a flexible investment style, HSBC Dynamic Fund (HDF) is one such open-ended fund that aims to invest predominantly in equities under normal circumstances but may quickly move 100% of its assets in debt and money market instruments. The HDF may also use derivatives with an aim to protect downside risk when the fund manager holds a bearish view on the equity markets. HDF follows the blend style (i.e. combination of growth and value) of investing and has been in existence for over 4 years now.

 

Fund Profile & Investment Decision Snapshot

Type of scheme

Open-ended

Category

Diversified equity

Sub-category

Flexi Style

Style

Blend

Launch date

24-Sep-07

Risk-Return proposition

Low Risk-Low Return

 

Investment Objective and Proposition

The fund's primary investment objective is "to provide long term capital appreciation by allocating funds in equity and equity related instruments. It also has the flexibility to move, entirely if required, into debt instruments in times that the view on equity markets seems negative."

 

Portfolio Characteristics

In the last one year, exposure of HDF to large caps has ranged between 76.0%-91.0% of its assets. While its midcap exposure was has been in the range of 5.0%-14.0%. However, despite being a dynamic assets fund, its exposure to debt and cash has remained in the range of 1.0%-19.0%. In other words, for the most part of the year, the fund held above 80% of its portfolio in equities.

While buying stocks for its portfolio, HDF follows a combination of top down and bottom-up approach whereby Investments are pursued in select sectors based on the investment team's analysis of business cycles, regulatory reforms, competitive advantage etc. While shortlisting stocks from among these sectors, the fund manager focuses on:

  • Fundamentals of the business
  • Industry structure
  • Quality of management
  • Sensitivity to economic factors
  • Financial strength of the company
  • Key earnings drivers.

HDF also invests in various debt instruments issued by corporate, banks, and/or state and central governments. While investing in debt, credit worthiness of the issuing entity is assessed. This credit evaluation includes a study of factors such as the following amongst others:

  • The operating environment of the company
  • Past track record as well as the future prospects of the issuer
  • Short as well as long-term financial health of the issuer

Equity Portfolio

Holdings

Oct 2011

Nov 2011

Dec 2011

Jan 2012

Feb 2012

HDFC Bank Ltd.

7.6

7.5

6.5

6.5

6.6

Grasim Industries Ltd.

5.0

5.1

5.6

5.6

6.1

Infosys Ltd.

6.3

6.2

6.1

6.1

6.0

ITC Ltd.

7.2

7.4

6.6

6.6

5.8

Reliance Industries Ltd.

6.0

5.8

6.0

6.0

5.2

Bharti Airtel Ltd.

5.1

5.5

5.1

5.1

5.0

ICICI Bank Ltd.

4.2

3.5

4.4

4.4

4.5

State Bank Of India

3.4

3.4

4.0

4.0

4.4

Bank Of Baroda

3.9

3.8

4.0

4.0

4.4

Larsen & Toubro Ltd.

4.2

4.1

4.2

4.2

4.3

 

As per the portfolio disclosed on February 29, 2012, the fund holds in all 28 stocks. Top-10 stocks constitute 52.2% of the portfolio, while its exposure to top-5 sector concentration has been 43.7% of its total portfolio. As on February 29, 2012, the large caps constituted 90.7% of the portfolio, while its exposure to mid and small caps was 7.0%, cash and cash equivalents assets were to the tune of 2.3% of the total portfolio. The fund manager of HDF has moderately churned the portfolio which is revealed by its portfolio turnover ratio of 1.4 times which is considered moderate.

Scheme Name

6-Mth (%)

1-Yr (%)

3-Yr (%)

5-Yr (%)

Std. Dev. (%)

Sharpe Ratio

ICICI Pru Dynamic(G)

7.2

-3.8

25.1

10.7

5.85

0.30

Franklin India Flexi Cap(G)

3.3

-7.3

24.3

9.4

7.55

0.24

Birla SL Equity(G)

2.8

-10.4

19.5

5.9

7.91

0.19

DWS Investment Opp(G)

0.7

-11.6

14.6

7.9

6.91

0.15

Bharti AXA Equity-Reg(G)

2.6

-6.8

14.2

-

7.78

0.15

HSBC Dynamic(G)

2.4

-8.4

13.4

-

5.38

0.15

BSE-200

3.6

-9.4

19.2

6.6

7.92

0.19

 

How HDF has fared vis-à-vis its peers

 

The table above reveals that HDF's performance has been dismal. Over a 3-Yr time frame, the fund has generated returns at 13.4% CAGR, thereby underperforming its benchmark index – BSE- 200 with a distinct margin. On the volatility front, the fund has exposed its investors to low risk (as revealed by the Standard Deviation of 5.38%) thereby being less volatile than some of its peers in the category as well as its benchmark. On the risk-adjusted return parameter (as gauged by the Sharpe ratio), the returns appear ordinary in comparison with its peers as well as its benchmark.

Performance across Market Cycles

BULL PHASE

BEAR PHASE

BULL PHASE

CORRECTIVE PHASE

24-Sep-2007
-
09-Jan-2008

09-Jan-2008
-
09-Mar-2009

09-Mar-2009
-
05-Nov-2010

05-Nov-2010
-
12-Apr-2012

HSBC Dynamic (G)

28.2%

-49.6%

52.2%

-12.2%

BSE-200

31.4%

-59.0%

84.4%

-13.6%

 

Study of performance across market cycles reveals that HDF has performed reasonably well during the bear and corrective market phases. However, it has failed to outpace its benchmark in the bull market phases.

 

Fund Manager Profile

Name of the Fund Manager

Mr. Tushar Pradhan (Equity)

Mr. Sanjay Shah (Debt)

Total Work Experience

Over 16 years

Over 10 years

Managing the fund since

Sep-11

Aug-09

Qualifications

B.com, MBA (USA)

B.com, ACA

Although HDF has been less volatile than its benchmark- BSE 200; it has completely failed to impress on the returns front. Its consistent underperformance makes it one of the worst performing funds in the category of flexi cap and dynamic assets funds. To sum up, HSBC Dynamic Fund, despite having a mandate to manage investors' money in a flexible style, hasn't able to provide advantage to its investors, when compared to the other funds in the category. Hence, we believe investors would be better of avoiding HSBC Dynamic Fund.

-------------------------------------------

Invest Mutual Funds Online

Transact Mutual Fund Online

 

Download Mutual Fund Application Forms from all AMCs

Download Mutual Fund Application Forms

 

Best Performing Mutual Funds

    1. Largecap Funds:
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    3. Mid and SmallCap Funds
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    4. Small and MicroCap Funds
      1. DSP BlackRock MicroCap Fund
    5. Sector Funds
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    6. Gold Mutual Funds
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund

 

Popular posts from this blog

Franklin India High Growth Companies Fund

Franklin India High Growth Companies Fund Online One of the key developments that the Street is keenly waiting for is a cut in interest rates by Reserve Bank of India . With demand rising gradually, a rate cut is expected to boost earnings growth for companies. In such a situation, schemes which invest in high growth companies are best suited, especially when seen from a long-term perspective. One such scheme is Franklin India High Growth Companies Fund. Fund managers Anand Radhakrishnan, Roshi Jain and Srikesh Nair strictly follow valuation parameters when it comes to choosing stocks.Valuation parameters, such as enterprise value, price-to-earnings growth ratio, forward price-to-sales ratio and discounted earnings per share, play a critical role in selecting companies for investments. Taking into account these parameters, the fund managers invest in companies which are poised for high growth in their respective sectors. This approach has been in favour of the scheme and it has perform...

Avoid NFOs

  Don't get taken in by the flurry of new fund offers. You will be better off sticking to the tried and tested schemes.   For the past one year, to cash in on the bull run in equities, mutual fund houses have gone on a new fund offer (NFO) overdrive. But experts are unanimous in their advice: avoid NFOs . While past performance is not an indicator of how a fund will fare in the future, it does tell the investor how skilful the fund manager is. This crucial information is missing in an NFO. Not only is there no track record to judge an NFO by, many NFOs are similar to funds that already exist. If the new fund is similar to existing funds, you are better off investing in the latter. Around 67% of the new launches in 2014 were closed-end products. Investing in the NFO of a closed-end fund is doubly risky. In case the fund's performance is lacklustre, a closed-end fund does not allow you to exit. Even though closed-end funds are listed on the stock...

Atal Pension Yojana contribution Tax Benefit for spouse

Contributions to Atal Pension Yojana (APY) are eligible for the same tax benefits as the NPS. This means that the contributions can be claimed under Section 80CCD (1B). The current limit for Section 80CCD (1B) is   Rs   50,000, over and above the   Rs   1.5 lakh limit under Section 80C. Section 80 CCD (1) is a different one, meant to cover employers' contribution towards NPS . You cannot get tax benefit by investing in the name of your spouse under Section 80 CCD . ------------------------------ ----------------- Invest Rs 1,50,000 and Save Tax under Section 80C. Get Great Returns by Investing in Best Performing ELSS Mutual Funds Top 10 Tax Saver Mutual Funds to invest in India for 2016 Best 10 ELSS Mutual Funds in India for 2016 1. BNP Paribas Long Term Equity Fund 2. Axis Tax Saver Fund 3. Religare Tax Plan 4. DSP BlackRock Tax Saver Fund 5. Franklin India TaxShield 6. ICICI Prudential Long Term Equity Fund 7. IDFC Tax Advantage (ELSS) Fund 8. Birla Sun Life Tax Relief 96 9. ...

Debt Mutual Fund Dividends are Taxable

DDT is deducted when a non-equity fund declares dividends. Equity and balanced fund dividends are tax-free The AMC is correct to deduct the dividend distribution tax (DDT) as it is mandated by tax laws. DDT in mutual funds is deducted every time a non-equity fund declares dividends. Equity fund and balanced fund dividends are tax-free . It is possible that you have invested in a non-equity fund for the first time or have received the dividend under a non-equity fund for the first time. That is why this is the first occasion when you have come across DDT.   The rate at which non-equity schemes deduct DDT has also gone up after the July 2014 budget. This is due to a change in calculation methodology. Earlier, if the fund has to declare a dividend of R 100, it used to make a provision for R 128.3, paying R 28.3 to the taxman and distributing the balance to the investor. This allowed the investor to bear less tax since the effective tax rate was 22.07 per ce...

Mutual Fund Exit Load Changes

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300 Mutual Fund Exit Load Changes AMCs don't communicate about any change in exit load directly with investors, but do update on their website   The exit load applicable to your investments is the load which existed at the time when you invested in the particular fund. Any subsequent changes in the exit load will not be applicable to your investments.   However, Asset Management Companies ( AMCs ) periodically publish addendums in the newspapers, which state any change in exit loads of specific schemes managed by them. Such changes are also posted on their websites. However, a direct communication to an investor is not made, considering the costs involved in doing so. In their own interests, investors should not only track the performance of the funds they i...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now