HSBC Large Cap Fund Growth INF336L01016

HSBC Large 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 weakened 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 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. Mediocre risk-adjusted performance also limits the process. This can be seen in the fund's five-year alpha calculated relative to the category index, which suggests that the process has struggled over that period.

This strategy owns more growth stocks than its peers in the Large-Cap Morningstar Category. But in terms of market capitalization, it is on par with peers. 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 also has had lower yield exposure than peers over these years; its portfolio has held fewer stocks with high dividend or buyback yields. 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. Similarly, in recent months, the strategy also had less exposure to the Yield factor than peers. In addition, this strategy holds highly liquid companies. More-liquid assets contribute to more-flexible exit strategies without price changes and tend to be a ballast during market selloffs. For example, if the portfolio faces successive redemptions in a short period of time, it will be less likely to suffer from a significant loss. 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 industrials by 3.0 percentage points in terms of assets compared with the category average, and its technology allocation is similar to the category. The sectors with low exposure compared with category peers are financial services and energy, with financial services underweighting the average portfolio by 5.7 percentage points of assets and energy similar to the average. The portfolio is composed of 40 holdings and is less top-heavy than peers. Specifically, 49.0% of the fund’s assets are concentrated within the top 10 fund holdings, as opposed to the category average's 51.8%. 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.