Skip to main content

Mutual Fund Review: HSBC Equity

HSBC Equity has fallen short of expectations when its peers are rewarding their investors with much higher returns

THE largest scheme from the HSBC basket, HSBC Equity Fund manages an average asset base of about Rs 1,377 crore. Launched in December 2002, the scheme is not only the oldest but also one of the most popular schemes from HSBC. Having run high on the popularity charts of the overall mutual fund (MF) industry during the few initial years of its launch, HSBC Equity has, however, failed to keep pace with the markets for quite some time now.

PERFORMANCE:

HSBC Equity started its innings in 2003 on a high not. In its first year, it beat its benchmark index the BSE 200 by extremely generous margins as it net asset value (NAV) jumped by 160% much higher than 95% rise in BSE 200 and a 72% return each by the Sensex and the Nifty that year. It maintained its winning streak in the following two years to emerge as one of the top performing funds of its time.

But having said that, the fund’s performance slipped in the most happening years of the bullrun. In 2006, it returned just about 37% against 40% returns each by the BSE 200 and the Nifty and 47% returns by the Sensex. In 2007, while it did manage to outsmart the Sensex and the Nifty, it marginally fell short of BSE 200’s over 60% returns by returning about 59% in that year. Though aligned to the indices, HSBC Equity returns fell short of the investor expectations since most popular diversified equity funds has rewarded their investors with much higher returns.

If one were to assume that it was probably the fund’s conservative investment strategy and large cap approach that restricted its returns in 2007, then the same strategy helped the fund during the financial crisis of 2008. The fund’s returns fell by about 48% and BSE 200’s fall by more than 56%. The Sensex and the Nifty gave a negative of about 52% each in that year.

But having impressed in the downturn, the fund once again failed to meet the expectations when the markets recovered last year. HSBC Equity’s 59% returns in 2009 were dwarfed by the spectacular performance by most major indices and diversified equity schemes in 2009, with its benchmark, BSE 200 in particular returning about 89% last year.

PORTFOLIO:

Being a large-cap fund, HSBC Equity has most of the BSE Group ‘A’ stocks in the portfolio incorporating an average of about 40 scrips at any given point in time. Most of these blue-chip stocks, however, date back to 2005-2006, which the fund has been holding since them. Ideally portraying the benefits of long-term holdings, stocks like Bhel, Bharti Airtel, HDFC Bank, HDFC, Infosys, L&T and Reliance Industries have more than doubled in valuation since they were acquired more than three years back.

It is also interesting to see the fund make some good picks during the meltdown at extremely reasonable valuations, including BPCL, Cipla, Hero Honda, Indian Oil, Jaiprakash Associates and State Bank of India among others. Some of the fund’s recent picks include Bombay Dyeing, Container Corp and Grasim Industries.

As far as the sectoral preferences are concerned, just like most other equity funds of the industry today, it is energy and finance that rule HSBC Equity portfolio. These two sectors together account for about 45% of the fund’s holdings. Of late, the fund has been gradually increasing its exposure in technology with Infosys alone commanding a 6% share in the portfolio.

OUR VIEW:

HSBC Equity is a largecap fund, which are considered to be the least riskiest of all diversified equity funds. The fund’s low risk quotient is also evident from its low beta of 0.81. Beta is a measure of volatility of the portfolio vis-à-vis the market. Thus a beta less than 1 indicates that the portfolio will be less volatile than the markets. This makes this fund an ideal investment for the risk-averse investors. It is, however, the fund’s performance, which though commendable in the downturn, has disappointed in rising markets. Given the fund’s current pace, investors can expect just about average returns from this fund.

Popular posts from this blog

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. ...

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...

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...

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...

L&T Income Opportunities Fund dividend

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 L&T Income Opportunities Fund declares L&T Mutual Fund has announced dividend under the following schemes: Scheme Dividend ( R /unit) L&T Gilt Investment-DQ 0.3 L&T Gilt Investment Direct-DQ 0.3 L&T Income Opportunities Ret-DQ 0.31 L&T MIP-Wealth Builder-DQ 0.3 L&T MIP-Wealth Builder Direct-DQ 0.3 L&T MIP-DQ 0.3 L&T MIP Direct-DQ 0.3 L&T Short Term Opp-DQ 0.26 L&T Short Term Opp Di...
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