HSBC Large Cap Equity Fund – Direct Plan


Overall analysis

3-year rolling excess returns remain motionless and TE against benchmark has been high overall; The fund has not given the maximum excess return in comparison to its peers; but has dropped to below the first quartile over the past 1 year.

Performance analysis

Rolling returns – 3yr rolling excess returns over 7 years 

Snail trail – 3y rolling excess over 7yrs

Tracking error – 1yr rolling over 7yrs

Information ratio – 1yr rolling over 7yrs

Rolling returns in quartiles

The rolling return chart shows excess 3-year annualised returns in context of peer return quartiles. The blue line’s time above the third green median line indicates the fund’s better than median performance.

The funds rolling return chart shows that the fund is close to the median green line, the maximum rolling return of equity large cap is 10.34% whereas this specific fund’s maximum rolling return is 1.97% which is not ideal. The Rolling Return Chart shows a motionless performance. 

The fund has been hovering around the top quartile and the median range; which is a range of -2% – 2% excess return approx.

Rolling risk/return (Snail-trail) 

The rolling risk/return chart shows excess 3-year annualised returns relative to the index. The top left quadrant would indicate higher returns with lower volatility than index.

The snail trail chart is not great, but is in harmless section of the chart. The fund has almost always been in the negative excess return with negative risk. Though negative excess return is not a great result for a MF, but at least the fund has not taken any risk for it.

Tracking error

The tracking error chart shows how the fund ‘tracks’ against the index. The higher the TE, the more active the fund’s return has been, with the 2-4% range considered to be barely active, 4-6% range considered to be reasonably active and anything higher attributed to concentrated/focused funds. Funds with TE of less than 2% can be considered to be closet indexers.

TE of the fund has been overall good, In 2022 it touched 4.36% and has dropped to 3.5% which is moderately good.

Information ratio

The information ratio is a measure of ‘risk-adjusted return’ as it’s the excess return per unit of excess volatility. Active funds should have IR of higher than 1, ideally higher than 1.3 at least to indicate skill. 

The information ratio of the fund dropped in 2018, but again it touched 2.3 and now it is 1.04 which means it is active.

Portfolio analysis

Stock style chart

Morningstar’s stock style chart shows the ‘style’ of the stocks in the portfolio in terms of size and value/growth style. The centroid shows the weighted average while the zone circle shows how varied the stock styles are.

The Stock Style of the fund shows the weight where the fund has invested in. Like this fund has majorly invested in the Growth segment.

Factor profile chart

Morningstar’s factor profile shows the historical style analysis of the stocks in the portfolio in terms of size, value/growth style and other key factors. The blue circle shows the fund relative to the black dot for the category average.

The factor profile chart shows that the fund style is growth, yield compared to 5 years historical range and category average is very low, momentum and quality of the fund is moderately high, volatility is moderate, liquidity of the fund is low compared to historical range and fund size small.

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