HSBC Tax Saver Equity Fund IDCW INF336L01AZ3

HSBC Tax Saver Equity earns a Below Average Process Pillar rating.

The process is bolstered by its team of two portfolio managers, which is sufficient to execute the process. However, the rating is limited by the parent firm's five-year risk-adjusted success ratio of 45%. The measure indicates the percentage of a firm's funds that have outperformed their respective category's median return for the period. The parent's subpar success ratio suggests that the firm could do better across its fund lineup. The parent firm's five-year retention rate of 74% also holds the process back.

This strategy has more exposure to the Growth factor than the ELSS (Tax Savings) Morningstar Category average. But in terms of size exposure, it does not have much of a bias and resembles the typical portfolio. Examining additional factor exposure, this strategy has continually had exposure to high-momentum stocks compared with Morningstar Category peers in the last few years. Momentum is based on the premise that market outperformers will continue to outperform, and laggards will continue to lag. This means that managers are overweighting stocks currently on a winning streak. In recent months, the strategy was more exposed to the Momentum factor compared with its Morningstar Category peers as well. This strategy has also leaned away from the stocks of companies with high dividend or buyback yields over these years. Its preference for stocks with lower yields may well lead to a growthier portfolio. However, growth stocks court additional risks if their forecasts do not come to fruition and are often more volatile than companies with stable dividends. Similarly, in recent months, the strategy also had less exposure to the Yield factor than peers. In addition, this strategy has exhibited a tilt toward liquid assets, evidenced by consistently holding companies with relatively higher trading volumes. Such stocks may have less potential upside than illiquid holdings, but they are easier to trade during market downturns. In this month, the strategy also had more exposure to the Liquidity factor over its peers. More information on a fund and its respective category's factor exposure can be found in the Factor Profile module within the Portfolio section.

The portfolio is overweight in healthcare and technology relative to the category average by 3.9 and 3.1 percentage points, respectively. The sectors with low exposure compared with category peers are utilities and basic materials, underweight the average by 4.5 and 2.8 percentage points of assets, respectively. The portfolio is composed of 54 holdings and is relatively concentrated. In particular, 44.5% of the fund’s assets are housed within the top 10 holdings, compared with the category’s 39.5% average.