HSBC Flexi Cap Fund Payout of Income Distribution cum Capital Withdrawal option Direct INF336L01DF9

HSBC Flexi Cap Fund earns a Below Average Process Pillar rating.

The process benefits from the size of its portfolio management team. With three portfolio managers at the helm, the fund is reasonably well-resourced. However, the rating is weakened by the fund's unimpressive long-term risk-adjusted performance. This can be seen in its five-year alpha calculated relative to the category index, which suggests that the process has struggled over that period. The parent firm's five-year risk-adjusted success ratio of 45% also weakens the process. 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 subpar success ratio suggests that the firm could do better across its fund lineup.

This strategy, over time, has preferred smaller market-cap companies, compared with others in the Flexi Cap Morningstar Category. But in terms of style (value/growth) exposure, it is similar. Looking at additional factor exposure, this strategy has consistently had exposure to high-momentum stocks compared with Morningstar Category peers over the past few years. Momentum strategies wager that market outperformers will continue to outperform, and laggards will continue to lag. Higher exposure to the former could mean the managers are overweighting stocks on winning streaks. In recent months, the strategy was more exposed to the Momentum factor compared with its Morningstar Category peers as well. This strategy also has had an overweight bias to the volatility factor over these years, meaning it has owned companies that have a higher historical standard deviation of returns. This contributes to a higher-risk, higher-reward approach. Compared with category peers, the strategy also had more exposure to the Volatility factor in the most recent month. Furthermore, this strategy has leaned toward low-yield stocks over recent years, holding fewer companies with high dividend or buyback yields. This is demonstrated by the portfolio's low exposure to dividends or buybacks. While companies with high yields provide steady income payments, they may cut payouts if their earnings fall. Nevertheless, the fund's Yield exposure was in line with peers in the latest month. 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 industrials and technology relative to the category average by 3.0 and 2.8 percentage points, respectively. The sectors with low exposure compared with category peers are financial services and consumer cyclical, with financial services underweighting the average portfolio by 5.3 percentage points of assets and consumer cyclical similar to the average. The strategy owns 83 securities and its assets are more dispersed than the typical peer in the category. In the most recent disclosure, 29.1% of the portfolio's assets were concentrated in the top 10 fund holdings, as opposed to the category average's 39.9%.