HSBC Small Cap Equity Fund – Direct Plan 


Overall analysis 

3-yr rolling excess returns in august 2016 crossed 10% and later it has been deteriorating and came down to -2.34% this indicates that the fund is not performing better against the benchmark and TE of fund is above 4%. The snail trail charts that fund has given higher return with high risk. The funds’ performance in the short run has been deteriorating, also has dropped to below first quartile over the past 1 year.

Performance analysis 

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 rolling return charts show that the blue line is below the third green median line and upper quartile, also it has dropped below the lower quartile too in the last one year which means that the fund is not better than median performance.

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.

This fund has shown impressive 3-year excess returns, touching 10% per annum and a significant time around the 4-6% pa, whilst higher than index volatility of 2-3% pa. However, the excess return came down to around -3% towards the end of October,2023

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.

The tracking error chart shows that the fund is above 4-6% range maximum time on the chart, it is around 6.62%, which means the fund is reasonably active.Also in october 2020 the fund has touched 10% and later it decreased/\.

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 chart shows that the fund is below 1 maximum time on the chart, in October,2022 it was -0.89 which means it is not ideal. 

Prepared by – Dhruvi Shah, August 2023


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