HSBC Value Fund Direct Plan Growth Option INF917K01HD4

HSBC Value Fund earns an Average Process Pillar rating.

The predominant contributor to the rating is the fund's strong long-term risk-adjusted performance. This can be seen in its ten-year alpha calculated relative to the category average, which suggests that the managers have shown skill in their allocation of risk. The process 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 beat their respective category's median return for the period. The parent's modest success ratio suggests that the firm could do better across its fund lineup.

This strategy skews toward smaller, higher-growth companies compared with its average peer in the Value Morningstar Category. Looking at 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 stocks that have recently outperformed will continue to outperform, and those that have underperformed will stay behind. 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. This is demonstrated by the portfolio's low exposure to dividends or buybacks. While companies with high yields provide consistent income payments, they may cut payouts if their earnings decline. 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 higher-volatility stocks in these years, meaning companies that have a higher historical standard deviation of returns compared with peers. Such stocks tend to rise faster and fall harder than the broad market. High-volatility exposure contributes to stronger performance during bull markets, but often at the cost of losing more during downturns. In this month, the strategy also had more exposure to the Volatility 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 basic materials and industrials relative to the category average by 7.5 and 3.2 percentage points, respectively. The sectors with low exposure compared with category peers are healthcare and energy, underweight the average by 6.6 and 4.6 percentage points of assets, respectively. The portfolio is composed of 77 holdings and is less top-heavy than peers. Specifically, 31.7% of the strategy's assets are concentrated within the top 10 fund holdings, compared to the category’s 39.2% average.