HSBC Global Equity Climate Change Fund NFO – Underlying fund generated 15% annualized returns – Should you subscribe?
HSBC Global Equity Climate Change Fund NFO – Should you subscribe?
HSBC Global Equity Climate Change Fund of Fund (FoF) would open for subscription on 3rd March, 2021. This is an open ended scheme that invests in existing HSBC Global Investment Funds – Global Equity Climate Change that generated 15% annualized returns in the last 5 years (USD terms). The underlying fund invests in global companies that are positioned to benefit from efforts to adapt to climate change. Such companies might not be listed in India, hence investing in this fund would indirectly help you to access and invest in such companies. Should you invest in HSBC Global Equity Climate Change Fund of Fund (FoF) NFO? Can we expect similar past performance of 15% annualized returns in future?
HSBC Global Equity Climate Change Fund NFO Details
This is an open-ended mutual fund. Here are the NFO issue details.
|HSBC Global Equity Climate Change NFO Details|
|Scheme reopens for continous purchase/sale||30-Mar-21|
|Minimum Lumpsum||Rs 5,000|
|Minimum SIP||Rs 1,000 for 12 months|
|NAV of the fund||Rs 10 during NFO period|
|Exit Load||> 1 year – 1%|
|Risk||Very High Risk|
|Max expense Ratio (TER)||2.25%|
|Benchmark||MSCI AC World TRI|
What is the investment objective of HSBC Global Equity Climate Change Fund?
To provide long term capital appreciation by investing predominantly in units of HSBC Global Investment Funds – Global Equity Climate Change (HGECC). The Scheme may also invest a certain proportion of its corpus in money market instruments and / or units of overnight / liquid mutual fund schemes, in order to meet liquidity requirements from time to time.
However, there can be no assurance or guarantee that the investment objective of the scheme would be achieved.
What is the allocation pattern in this mutual fund scheme?
This fund investment pattern is as follows:
|Type of instruments||Min %||Max %||Risk Profile|
|Units issued by HSBC Global
Investment Funds – Global Equity Climate Change Next 50 Index
|Money Market instruments and units of domestic overnight / liquid mutual funds||0%||5%||Low to medium|
Can NRI invest in this MF scheme?
Yes, they can invest in this scheme. They can invest on repatriation or non repatriation basis.
Why to invest in the HSBC Global Equity Climate Change Fund NFO?
Here are a few reasons to invest in this fund.
1) This underlying international mutual fund would invest in companies, listed in either developed or developing countries, that are positioned to benefit from efforts to adapt to climate change. This is a unique mutual fund scheme and investing in such funds can provide stable returns to investors.
2) The underlying fund has past history and it generated 15% annualized returns in the last 5 years.
Major risk factors you should consider before investing in such funds
One should consider some of these risk factors / negative factors before investing.
1) This underlying fund would invest in companies that adopt climate change and such strategies may or may not work.
2) This fund would invest in an international mutual fund and there are geopolitical risks and forex risk.
3) This fund invests some of the investments in debt instruments of corporates which is high risk.
4) This fund invests in another fund, however charges up to 2.25% management fees. When there is zero stock analysis is done as it invests in another fund, I am not sure why they want to charge such huge management fees.
5) Investors can refer to Scheme Information Document (SID) for complete risk factors of the mutual fund scheme.
Country / Region exposure by the underlying fund
Top 10 Sectors invested by the underlying fund
Top 10 Companies invested by the underlying fund
How is the past performance of HSBC Global Equity Climate Change Fund?
Since the HSBC Global Equity Climate Change Fund would invest in underlying fund, let us check the performance of the underlying fund.
Should you invest in the HSBC Global Equity Climate Change Fund NFO?
HSBC Global Equity Climate change Fund invests in global companies that are positioned to benefit from efforts to adapt to climate change which is a unique theme.
One should note that while this fund is new, the underlying fund has past performance. It generated stable 15% annualized returns in the last 5 years (USD terms). Due to bull market, it posted 41% returns in the last 1 year. Such past performance may or may not repeat.
Since it invests in global markets, this fund is high risk investment. High risk investors can invest some of their portfolio in such schemes. Moderate risk to low risk investors should avoid such funds.
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