| Type |
Open ended equity (diversified)
|
Benchmark |
BSE 200
|
| Min. Investment |
Rs 5,000 |
Face Value |
Rs 10 |
| Entry Load |
2.25%* |
Exit Load** |
1.00%** |
| Issue Opens |
December 30, 2005 |
Issue Closes |
January 27, 2006 |
|
*Entry and exit load details are for investments below Rs 50 m.
**if redeemed within 6 months of investment
|
The investment objective of the fund is to generate long term capital growth from an actively managed portfolio of equity and equity-related securities by investing primarily in sectors, areas and themes that play an important role in, and/or benefit from India's progress, reform process and economic development. These could include consumption, reforms, infrastructure, outsourcing and global competitiveness. The fund will attempt to take a medium to long-term view when investing in such opportunities.
*Source: Offer document
| |
In many ways, HSBC Advantage India Fund (HAIF) is a thematic fund, but with a difference and an important one at that. While existing thematic funds target a particular theme (for example, infrastructure or consumerism or outsourcing or global competitiveness), HAIF has no theme bias, it will target all these themes and even others that it finds attractive. The idea is to focus on a couple of themes and ride them aggressively.
It will be apparent to the discerning investor that HAIF will have a high risk profile within the equity funds segment. The fund's objective to remain invested across a couple of themes will deprive it of the benefit of a broad-based and diversified portfolio (in terms of sectors and themes).
Given that existing diversified equity funds anyways consciously target 'hot' themes without compromising on portfolio diversification, we believe that the investors' interests are better served by investing in them. As a matter of fact, even HAIF's sibling HSBC Equity (a predominantly large cap fund) targets the hottest sectors; only difference is that in line with its mandate it invests predominantly in large cap stocks within those sectors. To that end, we recommend that investors first consider existing diversified equity funds with an established track record before considering HAIF.
|
Given its investment strategy it is apparent that HSBC Advantage India Fund (HAIF) is going to be managed aggressively. The fund will pursue a combination of the top down and bottom up investing styles. It will target the biggest opportunities and invest in them aggressively. At any point, it is expected that the fund will focus on one or two themes.
| Instruments |
Allocation Range |
| Equity and equity-related securities |
70%-100% |
| Debt and money market securities |
0%-25% |
Both the equity schemes from HSBC Mutual Fund - HSCB Equity and HSBC India Opportunities are well-diversified in terms of stock allocations. It is expected that HAIF although thematic in nature, will also be well diversified in its stock allocations. In terms of market capitalisation, the fund will invest across the spectrum in large caps as well small/mid caps.
|
Mr. K. R. Shanbhag, is the fund manager of HSBC Midcap Equity Fund. He was a Senior Analyst at HSBC Mutual Fund before graduating as the fund manager. He joined the fund house since inception in 2002. Before joining HSBC Mutual Fund he was with ING Mutual Fund.
|
At any point in time, HAIF will aggressively target a select few themes for investment. Clearly diversification across several sectors/themes is not going to be a feature of the fund. To that end, volatility from exposure to a limited number of sectors could become the mainstay of its investment strategy. It will be interesting to see how the fund handles a downturn with a concentrated portfolio. Also there is an implicit assumption that there will be at least a couple of active themes/trends at any point in time. It remains to be seen what the fund's equity strategy will be during a bearish market without any themes.
From a fund management perspective, investors must note that HSBC Mutual Fund has new CIO (Chief Investment Officer) at the helm. Mr. Anup Maheshwari who was with DSP ML Mutual Fund earlier joined HSBC Mutual Fund in December 2005. His track record at DSP ML Mutual Fund has been very good and in our view his association with a process-driven fund house like HSBC Mutual Fund spells good news for its investors.
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