HSBC Tax Saver Equity Fund IDCW INF336L01AZ3

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

The process is strengthened by its team of two portfolio managers, which is sufficient to execute the process. 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 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 weakens 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 is similar to the average. Examining 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 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. Given the high trading volume of holdings, this fund also tilts toward liquid assets. 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 technology and healthcare relative to the category average by 5.5 and 3.6 percentage points, respectively. The sectors with low exposure compared with category peers are utilities and basic materials, underweight the average by 4.2 and 3.1 percentage points of assets, respectively. The portfolio is composed of 53 holdings and is quite concentrated. More concretely, 45.1% of the fund’s assets are housed within the top 10 holdings, as opposed to the category average of 39.6%. And finally, in terms of portfolio turnover, looking at year-over-year movements, 19% of the fund's holdings have turned over, whether through increasing, decreasing, or changing a position.