The Hindu Business Line : HSBC Equity: Invest

While the market continues to reel under the pressure of global uncertainties, investors can view this as an opportunity to buy funds with a sound track record that also hold limited downside risks.

With several of the large-cap stocks trading at a steep discount, funds with a large-cap bias may be an appropriate choice at this point in time. Such funds, apart from containing declines, may also provide early gains during a rally. Investors can consider investing in HSBC Equity, a fund that invests predominantly in large cap stocks with a conservative investment style

Suitability: HSBC Equity can form the core of a long-term investor’s portfolio. The fund’s timely sector and stock selection has helped contain the downside during this volatile period.

Performance: The fund’s annualised three- and five-year returns of 16.9 per cent and 35 per cent respectively, place it comfortably ahead of the category average as well as the benchmark BSE-200.With a one-year return of -6.5 per cent it has outpaced the benchmark by nine percentage points.

When a number of funds favoured capital goods and power stocks to enhance returns, HSBC Equity Fund’s measured exposure to both the sectors helped it contain the erosion seen in recent times. This apart, once the January correction became apparent, the fund swiftly moved 15 per cent of the assets into cash and subsequently declared a dividend of Rs10 per unit in February, thus providing some safety to investor’s capital.

That the fund has not trailed its benchmark during the months of decline over the last two years reaffirms its capability to contain downside risks.

Portfolio overview: While on a year-to-date basis, the fund witnessed a 34 per cent decline, the erosion of its assets under management was restricted to 15 per cent. In this uncertain period, some funds lost even 60 per cent of their assets; but HSBC Equity appears to have attracted inflows. About one-fifth of the assets were invested in domestic consumption-related sectors .

Fund facts: The fund is jointly managed by Mr Mihir Vora and Mr Jitendra Sriram.

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