HSBC Focused Equity Fund NFO – Focus on Max 30 Stocks – Would this be a winner?
Since markets are volatile, mutual fund houses are floating multicap mutual funds now. Last week BOI Axa has floated multicap fund. Now HSBC Mutual Fund is coming up focused equity fund that would open for subscription on 1 July, 2020. Multicap fund invests across market capitalization such as large cap, midcap and smallcap stocks. The HSBC Focused equity fund would invest a maximum of 30 stocks across market cap. What are the issue details of the HSBC Focused Equity Fund? Should you invest in the HSBC Focused Equity Fund? Would this be a winner in the focused equity fund segment?
Also Read: BOI Axa Multi Cap Fund Review
What are focused mutual funds?
As the name indicates, focused mutual fund would focus on a limited number stocks in a limited number of sectors, rather than holding a broad or diversified mix. Focused funds generally hold approx 20-30 companies or even less, unlike many other equity funds that hold more than 100 companies.
While the multicap mutual funds invests across various market cap without any restrictions, focused mutual funds would invest across market cap, but would limit the number of stocks. Hence these are differentiated compared to multicap funds
Issue details of HSBC Focused Equity Fund (NFO)
This is an open-ended equity mutual fund scheme.
This scheme would open for subscription on 1 July, 2020.
This scheme would close for subscription on 15 July, 2020.
Since this is an open ended scheme, it would again open for subscription after the NFO period. It would reopen from 29 July, 2020 for fresh subscriptions.
This scheme is available in both regular and direct plans.
This plan offers both growth option and dividend option.
This scheme is available for lump sum and SIP investment.
Minimum investment is Rs 5,000 and in multiples of Rs 1 there-off for lump sum investments.
Minimum investment is Rs 500 per month for monthly SIP and for a tenure of 6 months.
The NAV of the fund is Rs 10 per unit during the NFO initial subscription.
There is no entry load to invest in this fund.
There is an exit load of 1%, if the units are redeemed within 1 year.
This scheme is classified as moderate high risk scheme.
Scheme total expense ratio (TER) is estimated at a maximum of 2.25%.
What is the investment objective of HSBC Focused Equity Fund NFO?
This scheme objective is to seek long term capital growth through investments in a concentrated portfolio of equity & equity related instruments of up to 30 companies across market capitalization.
There is no assurance or guarantee that the investment objective of the scheme will be realized.
Who is eligible to invest in this mutual fund scheme?
The following is eligible to invest in this scheme.
1) Resident adult individuals, either singly or jointly.
2) Minors through Parents/Lawful Guardian.
3) Hindu Undivided Family (HUF) through its Karta.
4) Partnership Firms in the name of any one of the partners.
5) Proprietorship in the name of the sole proprietor.
6) Companies, Body Corporate, Societies, Association of Persons, Body of Individuals, Clubs and Public Sector Undertakings registered in India if authorized and permitted to invest under applicable laws and regulations.
You can check complete list of eligible investors in KIM / prospectus.
Who is the Fund Manager of HSBC Focused Equity Fund?
The Fund Manager is Mr. Neelotpal Sahai and Mr. Gautam Bhupal.
What is the benchmark for this scheme?
The benchmark for this scheme is S&P BSE 200 TRI.
What is the allocation pattern in this mutual fund scheme?
This fund investment pattern is as follows:
1) It invests 65% to 100% in equity and equity related Instruments subject to an overall limit of 30 stocks across market capitalization. The risk profile in this segment is high.
2) It would invest 0% to 35% in debt instruments and money market instruments. The risk profile in this segment is low to medium.
3) It would invest 0% to 10% in units issued by REITs and InvITs. The risk profile in this segment is medium to high.
Why to invest in the HSBC Focused Equity Fund?
Here are a few reasons to invest in such focused mutual funds.
1) Focused mutual funds invests across large cap, midcap and small cap stocks with a limit of number of stocks. This ensures picking up quality stocks.
2) Instead of investing in several mutual funds across market cap, investors can select few funds from multicap or focused segment that can act as diversification. As an example, you don’t need to invest separately in Midcap mutual funds if you would like to take advantage of midcap segment by investing in these funds.
3) Provides risk mitigation in volatile markets as the focus is not just from one single market cap.
Some key risk factors you should consider before you invest in such funds
One should consider some of these risk factors / negative factors before investing.
1) While investing in equity stocks are risk, it also invests in small cap and midcap stocks that are very high risk.
2) Focused funds does not suit for low to moderate risk investors as it invests even in midcap or small cap stocks.
3) You can refer complete risk factors of investing in this particular scheme in SID / KIM / NFO prospectus.
How is the Performance of existing Focused Mutual Funds?
Now, let us look at some of the best performing focused mutual funds in India.
|Fund Name||1 Yr Returns||3 Yr returns||5 Yr returns|
|SBI Focused Equity Fund||-7.7%||5.5%||9.3%|
|Axis Focused 25 Fund||-8.4%||4.1%||8.7%|
|IIFL Focused Equity Fund||-5.7%||4.9%||8.6%|
|Principal Focused Multicap Fund||-7.7%||2.4%||6.4%|
|ICICI Prudential Focused Equity Fund||-8.2%||1.0%||4.7%|
|Nippon India Focused Equity Fund||-19.3%||-4.3%||4.3%|
|IDFC Focused Equity Fund||-12.7%||-1.3%||4.3%|
|Franklin India Focused Equity Fund||-18.2%||-1.2%||4.1%|
|DSP Focus Fund||-13.3%||-1.0%||3.9%|
|HDFC Focused 30 Fund||-23.0%||-6.8%||1.8%|
*Returns above 1 year are annualised
How to invest in this mutual fund?
After reading the positives and risk factors, if you have decided to invest in this scheme, you can invest in any of the following methods:
1) You can login to your mutual fund account and visit new fund offers sector and invest through the links provided
2) You can directly visit AMC website and invest with the instructions provided.
3) You can invest through third party mutual fund platforms like Mycams, Karvy mutual fund platform etc.,
4) You can approach any mutual fund broker.
HSBC Focused Equity Fund NFO – Would this be winner in the segment?
The HSBC Focused Equity Fund is a focused fund that invests across large cap, midcap and smallcap segment, but focuses only for maximum of 30 stocks. This is for high risk investors as it contains midcap and smallcap asset class. This is a new fund and does not have past performance and one cannot assess how it would perform in the future. If you are a high risk investor and would like to test with new focused funds, you can invest. Otherwise, you can invest in some of the existing focused funds or top performing multicap mutual funds that had already proven its performance in the last 5-10 years.
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HSBC Focused Equity Fund NFO Review
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