HSBC Large and Mid Cap Fund Direct Reinvestment of Income Distribution cum Capital Wdrl Opt INF336L01NX1

HSBC Large& Mid Cap Fund earns a Below Average Process Pillar rating.

The process is bolstered 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 46%. 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 relatively low 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 more exposure to the Growth factor than the Large & Mid-Cap 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 exhibited a tendency to hold fewer stocks with high dividend or buyback yields compared with Morningstar Category peers in recent 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. In the latest month, the strategy was also less exposed to the Yield factor compared with Morningstar Category peers. 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 exhibited a tilt toward higher-volatility stocks in these years, meaning companies that have a higher historical standard deviation of returns compared with peers. This contributes to a higher-risk, higher-reward approach. 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 industrials and consumer cyclical relative to the category average by 7.2 and 5.0 percentage points, respectively. The sectors with low exposure compared with category peers are basic materials and energy, underweight the average by 6.5 and 3.7 percentage points of assets, respectively. The portfolio is composed of 97 holdings and is quite concentrated. Specifically, 38.0% of the portfolio's assets are housed within the top 10 holdings, compared to the typical peer's 31.5%.