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Suresh Krishnamurthy

INVESTORS in HSBC India Opportunities can retain exposures in the fund. Its performance in the first year since launch has been impressive, matching the expectations raised by the impressive performance of HSBC Equity in the first year after its launch. While the fund certainly does not lead the pack of mutual funds, its performance does place it among the toppers.

HSBC India Opportunities seeks to invest in stocks across all market capitalisation categories to generate long-term capital growth. It has the mandate to shift to debt to the extent of about 50 per cent of its net assets. Its benchmark is BSE-500.

The fund is comparable to DSP ML Opportunities, UTI Dynamic Equity and a host of multi-cap funds such as Chola Multi-Cap and Franklin Flexi-Cap funds launched recently, rather than to mid-cap funds.

Performance: HSBC-IO has raked in returns of about 37 per cent in the first year of launch.

This is marginally below the figure generated by HSBC Equity. The fund has, however, gained more than funds such as Tata Equity Opportunity, Deutsche Investment Opportunity and DSP ML Opportunity, while it substantially under-performed UTI Dynamic Equity Fund.

According to the HSBC Asset Management newsletter, the overweight position in the IT sector and underweight position in sectors such as financials (which includes public sector banks) and consumer staples (including fast moving consumer goods multinationals such as HLL) has hurt performance.

The fund has, however, chosen to remain overweight in technology, apart from cement and automobiles.

Portfolio allocation: HSBC India Opportunities is a mid-size fund with about Rs 500 crore of assets under management. It is almost fully invested with only about 1 per cent of the net assets in cash.

The fund has opted to take concentrated exposures to the top few stocks.

The top ten stocks account for slightly more than half of the net assets. The rest of the fund is invested in an extensively diversified portfolio of about 50 stocks.

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