HSBC Tax Saver Equity Fund Direct Growth INF336L01EE0

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

The process benefits from its team of two portfolio managers, which is enough to execute the process. However, the rating is weakened 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 detracts from the process.

This strategy has tended to hold more growth stocks than others in the ELSS (Tax Savings) Morningstar Category. But in terms of size exposure, it does not have much of a bias and resembles the typical portfolio. Analyzing additional factors, 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 has also leaned away from the stocks of companies with high dividend or buyback yields over these years. Returning capital to shareholders often is not the highest priority of such businesses. The shares of such companies can deliver strong returns if they fulfill their growth projections, but they also carry more risk. Similarly, in recent months, the strategy also had less exposure to the Yield factor than peers. In addition, this strategy holds highly liquid companies. 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 top-heavy. Of the strategy's assets, 44.5% are concentrated within the top 10 holdings, compared to the category’s 39.5% average.