Fund pick: HSBC Value Fund, a steady drumbeat of value creation

HSBC Value Fund, launched in January 2010, has consistently ranked in the top 30 percentile of the focused funds category in the CRISIL Mutual Fund Ranking (CMFR) for three consecutive quarters up to June 2024. As of June 2024, the fund’s assets under management stood at Rs 13,358 crore, an increase from Rs 7,285 crore in June 2021.

 

The fund has been managed by Venugopal Manghat, Sonal Gupta, and Gautam Bhupal since November 2012, July 2021, and October 2023, respectively.

 

The primary investment objective of the scheme is to achieve long-term capital appreciation through a diversified portfolio invested in equity and equity-related instruments, focusing on undervalued securities. 

   

Trailing returns

 

Over the past six months, as well as in one-, two-, three-, five-, seven-, and 10-year trailing periods, the fund has outperformed both its benchmark (Nifty 500 Total Return Index) and its peers (funds ranked under the value/contra fund category in the June 2024 CMFR).

 

An investment of Rs 10,000 in the fund on January 8, 2010 (the fund’s inception date) would have grown to Rs 1.07 lakh by October 24, 2024, reflecting an annualised return of 17.4 per cent. In comparison, the same investment in the category would have grown to Rs 75,676 (14.7 per cent annualised return), and in the benchmark, to Rs 60,995 (13 per cent).

 

A systematic investment plan is a disciplined approach to investing offered by mutual funds, allowing investors to contribute a fixed amount at regular intervals.

 

A monthly investment of Rs 10,000 over the past 10 years in the fund, totalling Rs 12 lakh, would have grown to Rs 34.04 lakh (19.83 per cent annualised returns), compared to Rs 29.39 lakh (17.1 per cent) in the benchmark as of October 24, 2024.

 

Portfolio analysis

 

In the past three years, the fund has dynamically adjusted its allocations across market capitalisations while predominantly investing in largecap stocks. Its exposure to largecap stocks averaged 49.28 per cent during this period, while midcap and smallcap stocks accounted for 21.84 per cent and 27.51 per cent, respectively. The non-equity portion averaged 1.37 per cent.

 

During the same period, the portfolio was diversified across 22 sectors, with financial services dominating at an average allocation of 26.46 per cent. This was followed by information technology (9.95 per cent), capital goods (8.63 per cent), construction (5.92 per cent), and automotive and automotive components (5.6 per cent).

 

Throughout the analysis period, the fund invested in 105 stocks and consistently held 33. Key contributing stocks to the portfolio included Jindal Stainless, NTPC, ICICI Bank, Mahindra & Mahindra, and MCX.