HSBC Flexi Cap Fund Growth Direct INF336L01DH5

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

The process is strengthened by the size of its portfolio management team. With three portfolio managers at the helm, the fund is reasonably well-resourced. However, the rating is limited by the parent firm's five-year risk-adjusted success ratio of 44%. 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 relatively low success ratio suggests that the firm could do better across its fund lineup. Unremarkable risk-adjusted performance also holds the process back. This can be seen in the fund's 10-year alpha calculated relative to the category average, which suggests that the process has struggled over that period.

This strategy targets smaller plays than its peers’ average in the Flexi Cap Morningstar Category. But in terms of style (value/growth) exposure, it does not have much of a bias and resembles the category's typical portfolio. Examining additional factor exposure, this strategy has exhibited a tilt toward high-volatility stocks or the shares of companies with histories of the higher standard deviation of returns, compared with Morningstar Category peers in the last few years. This orientation tends to pay off most prominently when markets are hot. In recent months, the strategy was more exposed to the Volatility factor compared with its Morningstar Category peers as well. This strategy has had more exposure to high-momentum stocks over its peers in recent 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. Compared with category peers, the strategy also had more exposure to the Momentum factor in the most recent month. In addition, this strategy has displayed lower yield exposure than peers, holding fewer companies with high dividend or buyback yields over recent 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. In recent months, the strategy also had less Yield factor exposure than 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 technology and industrials relative to the category average by 4.3 and 4.2 percentage points, respectively. The sectors with low exposure compared with category peers are financial services and consumer cyclical, underweight the average by 5.7 and 4.2 percentage points of assets, respectively. The strategy owns 86 securities and its assets are more dispersed than the typical peer in the category. In the most recent disclosure, 28.7% of the portfolio's assets were concentrated in the top 10 fund holdings, as opposed to the category’s 40.4% average. And in closing, in terms of portfolio turnover, looking at year-over-year movements, 43% of the fund's holdings have changed, whether through increasing, decreasing, or changing a position.