Mutual Funds
HSBC Managed Solutions: Avoid it

Hybrid schemes investing in gold have not performed well in the past for obvious reasons. And the fund management at HSBC Mutual Fund has been particularly bad

HSBC Mutual Fund plans to launch an open-ended fund of funds scheme—HSBC Managed Solutions India. The scheme would have three different plans, all three of which will invest in a hybrid portfolio of stocks. The growth plan would take on high risk and invest in a portfolio with a high allocation to equity schemes (for details on asset allocation, see table). The remaining part of the portfolio will be spread across debt schemes, gold ETFs (Exchange Traded Funds) and units of overseas schemes. The balanced plan would have a lower allocation to equity schemes and the investment in debt schemes would increase to a maximum of 60%. Here again the scheme would invest a part of it portfolio in gold ETFs and overseas schemes.
 

The conservative plan, as the name suggests, would invest only up to a maximum of 20% in equity schemes, the debt portion would range from 70%-100%. The scheme would also invest up to a maximum of 10% in gold ETFs. We have done an analysis on hybrid schemes in the past and the results have shown that such schemes have not put up a great performance in the past. Not only this, HSBC as a fund house has a poor performance track record.

 

Plan

Asset Allocation

Minimum

Maximum

Managed
Solutions India –
Growth

Equity Schemes

30%

90%

Debt Schemes & Money Market instruments

10%

35%

Gold Exchange Traded Funds

0%

10%

Units of Overseas Funds

0%

25%

Managed
Solutions India –
Balanced

Equity Schemes

10%

70%

Debt Schemes & Money Market instruments

30%

60%

Gold Exchange Traded Funds

0%

10%

Units of Overseas Funds

0%

20%

Managed
Solutions India –
Conservative

Equity Schemes

0%

20%

Debt Schemes & Money Market instruments

70%

100%

Gold Exchange Traded Funds

0%

10%

 

Last year we had shown that schemes which had an allocation to equity, debt and gold have performed poorly. (Read: Hybrid Funds: Adding gold did not help). Just half of them were able to outperform their composite benchmark. Having gold as an investment is risky, apart from which investors have to decide how much they can put in such a fund and how much returns it is expected to generate. Too many complex and global factors influence the price of gold. During a period of economic prosperity, gold can go down quite a bit in a continuous fashion. Yet there are many fund houses which have filed offer documents to launch more of such schemes.
 

Schemes of HSBC Mutual Fund have regularly come up in our performance analysis of equity schemes for all the wrong reasons. Some of its schemes have performed poorly in the last few years. In the past one year when the Sensex rallied by over 20%, three of its five schemes—HSBC India Opportunities Fund, HSBC Equity Fund and HSBC Dynamic Fund underperformed not only the category average but their respective benchmarks as well. The schemes returned an annualised monthly mean of 20.67%, 20.14% and 19.01% compared to their benchmarks that returned over 24%. The only schemes that marginally outperformed the benchmark were the mid-cap and small-cap schemes—HSBC Midcap Equity Fund and HSBC Small Cap Fund with an annualised monthly mean return of 35.14% and 32.86% compared to the benchmark returns of 28.51% and 25.68% respectively.

 

Other details of the scheme:
 

Benchmark
 

Growth plan: Composite Index constituting 80% of BSE 200 Index and 20% of CRISIL Composite Bond Index.
 

Balanced plan: CRISIL Balanced Fund Index.
 

Conservative plan: Composite Index constituting of 90% into CRISIL Composite Bond Index and 10% of BSE 200 Index.
 

Entry and Exit Load: Nil.
 

To read mutual fund analysis on Moneylife, please click here.

User

Sensex, Nifty breaks out: Wednesday Closing Report

As was tentatively suggested last week, the market broke out to a new short-term high. Will the gains be sustained?

The resolution of the US “fiscal cliff” enabled the Indian market closing in the green for the second day. The rally saw the Nifty hitting an intraday high of 6,006, its best since 7 January 2011 and the Sensex scaling a high of 19,757, its best since 6 April 2011. As was tentatively suggested last week, the market broke out to a new short-term high. But the question remains whether the gains be sustained. The National Stock Exchange (NSE) reported a volume of 75.67 crore shares and advance-decline ratio of 1107:643.

 

The market opened on a strong note tracking its Asian peers which were in the positive in morning trade as the House of Representatives late Tuesday night passed the “fiscal cliff” bill by 257 to 167 votes, ending a dramatic New Year's Day showdown over income taxes and deep federal spending cuts.

 

The Nifty opened 32 points up at 5,983 and the Sensex started off at 19,693, a gain of 112 points over its previous close. After inching higher in initial trade, the benchmarks witnessed a minor bout of profit taking, which led the market to its intraday low. At the lows, the Nifty fell to 5,982 and the Sensex slipped to 19,687.

 

Brushing aside the initial hiccups, all-round buying led the benchmarks higher in morning trade. The gains were also supported by news that India’s manufacturing sector growth for December 2012 improved to 54.7 in December, up from 53.7 in November, registering the fastest pace in six months. The upmove helped the market hit its intraday high in noon trade. At the highs, the Nifty scaled 6,006 and the Sensex climbed to 19,757.

 

The indices pared a small part of their gains in subsequent trade and were seen moving sideways in the post-noon session. A positive opening of the key European markets kept the local market in the green till the end of the trading session.

 

The market closed in the positive for the second day in a row. The Nifty closed 42 points (0.71%) to 5,993 and the Sensex climbed 133 points (0.68%) to finish trade at 19,714.

 

Among the broader indices, the BSE Mid-cap index climbed 0.56% and the BSE Small-cap index surged 0.90%.

 

The top sectoral gainers were BSE Consumer Durables (up 1.65%); BSE Capital Goods (up 1.40%); BSE Oil & Gas (up 1.29%); BSE PSU (up 1.02%) and BSE Bankex (up 0.96%). BSE Fast Moving Consumer Goods (down 0.26%) and BSE IT (down 0.07%) were the only losers in the sectoral space.

 

Twenty three of the 30 stocks on the Sensex closed in the positive. The chief gainers were Bajaj Auto (up 3.07%); Maruti Suzuki (up 2.74%); ONGC (up 2.50%); BHEL (up 2.38%) and Sterlite Industries (up 2.19%). The main losers were Wipro (down 0.78%); ITC (down 0.61%); Mahindra & Mahindra (down 0.44%); Coal India (down 0.35%) and Hindustan Unilever (down 0.14%).

 

The top two A Group gainers on the BSE were—Gitanjali Gems (up 8.09%) and Videocon Industries (up 6.47%).

The top two A Group losers on the BSE were—Torrent Power (down 1.99%) and Colgate Palmolive (down 1.90%).

 

The top two B Group gainers on the BSE were—Aarya Global Shares & Securities (up 20%) and Ankit Metal & Power (up 20%).

The top two B Group losers on the BSE were—ArunJyoti Enterprises (down 9.93%) and Arcee Industries (down 9.72%.

 

Out of the 50 stocks listed on the Nifty, 35 stocks settled in the positive. The main gainers were Bajaj Auto (up 3.66%); Jaiprakash Associates (up 3.40%); Maruti Suzuki (up 3.28%); BPCL (up 3.14%) and IDFC (up 3.08%). The top losers were Asian Paints (down 0.97%); Bharti Airtel (down 0.65%); ITC (down 0.59%); M&M (down 0.54%) and Wipro (down 0.48%).

 

Markets across Asia closed mostly in the green on optimism from the US, ending weeks of uncertainty over the “fiscal cliff”. The uptick in the Chinese official purchase managers’ index for December, a sign of a pick up in growth, also supported the sentiments.

 

The Hang Seng jumped 2.89%; the Jakarta Composite gained 0.69%; the Straits Times surged 1.09%; the Seoul Composite climbed 1.71% and the Taiwan Weighted advanced 1.04%.  Bucking the trend, the KLSE Composite declined 0.84%. Markets in China and Japan were closed for trade today.

 

At the time of writing, the CAC 40 of France was trading 2.02% higher, the DAX of Germany surged 1.97% and UK’s FTSE 100 climbed 1.86%. At the same time, the US stock futures were trading with good gains, indicating a positive opening for US stocks.

 

Back home, foreign institutional investors were net buyers of shares totalling Rs665.04 crore on Tuesday while domestic institutional investors were net sellers of stocks aggregating Rs406.14 crore.

 

Emco today said it has got Rs458-crore orders from Power Grid Corporation for execution of a transmission line from Champa to Kurukshetra. The transmission line would be designed to carry 6,000 MW power from generating stations in Chhattisgarh to the Northern Grid. Emco jumped 6.94% to settle at Rs33.90 no the NSE.

 

Reliance Power today said it has synchronised the second 300 MW unit at Butibori thermal power plant in Maharashtra, taking the company's total operating capacity to 1,840 MW. The Butibori project, located near Nagpur, has a total capacity of 600 MW. The first 300 MW unit achieved full load in August last year. The stock gained 1% to close at Rs95.75 on the NSE.

 

L&T Finance Holdings on Tuesday said it has completed the acquisition of auto finance company Family Credit Ltd for Rs120 crore. Family Credit, which was a subsidiary of Societe Generale Consumer Finance, has presence across two-wheeler and auto financing, L&T Finance Holdings said in a filing on the BSE. L&T Finance Holdings closed 0.43% lower at Rs92.80 on the NSE.

User

COMMENTS

snehakamath

4 years ago

In the next few weeks there areonly positive news anticipated.
There is excess liquidity thanks to Japan joining the bandwagon of USA & Europe
It is really rewarding to those who can dare and act now.
GMR,GVKPIL,LITL,Adani,Gati, MRPL,M&M,Tata motors,Tata steel, Voltas, SAIL, GMDC, Infy ,Wipro,Petronet LNG, Indraprasta Gas............The list is endless which can easily give 25% to 30% returns at current prices.Rewards outweigh the risks in these shares

Even banks like SBIN,Canara bank, Andhra bank, Bank of baroda can still give easily +10% return despite having appreciated in the last 5 weeks

snehakamath

4 years ago

In the next few weeks there areonly positive news anticipated.
There is excess liquidity thanks to Japan joining the bandwagon of USA & Europe
It is really rewarding to those who can dare and act now.
GMR,GVLPIL,LITL,Adani,Gati, MRPL,M&M,Tata motors,Tata steel, Voltas, SAIL, GMDC, Infy ,Wipro,Petronet LNG, Indraprasta Gas............The list is endless which can easily give 25% to 30% returns easily

Even banks like SBIN,Canara bank, Andhra bank, Bank of baroda can still give easily +10% return despite having appreciated in the last 4=5 weeks

YV Reddy to head 14th Finance Commission set up to look into pricing of utilities

The Commission would also look into the "need for insulating the pricing of public utility services like drinking water, irrigation, power and public transport from policy fluctuations through statutory provisions

New Delhi: The Indian government on Wednesday constituted the 14th Finance Commission under the Chairmanship of YV Reddy, former Governor of the Reserve Bank of India (RBI), which among other things, will suggest steps for pricing of public utilities like electricity and water in an independent manner, reports PTI.

 

Announcing the formation of the Commission, Finance Minister P Chidambaram said it will look into issues like disinvestment, GST compensation, sale of non-priority PSUs and subsidies.

 

The other members of the Commission, which will submit its report by 31 October 2014, include Former Finance Secretary Sushma Nath, NIPFP Director M Govinda Rao, Planning Commission Member Abhijit Sen and Former Acting Chairman of National Statistical Commission Sudipto Mundle.

 

The recommendations of the Commission, set up under the provisions of the Constitution on sharing of tax proceeds between the Union and States, will apply for the period beginning 1 April 2015.

 

Among other things, the Commission would look into the "need for insulating the pricing of public utility services like drinking water, irrigation, power and public transport from policy fluctuations through statutory provisions".

 

Asked whether the government is giving a signal for price hike of public utilities, Chidambaram said: "We are not giving any signal. We are only highlighting matters (relating to) the management of nation's finances over the five year period from 2015 ... These are matters which cannot be ducked or shrugged away. We have to face these matters".

 

Finance Commission is set up every five years to suggest principles governing the distribution of tax proceeds among Centre, States and local bodies..

 

The Commission, Chidambaram said, would review the state of finances, deficit and debt levels of the Centre and states, keeping in view, in particular, the fiscal consolidation roadmap recommended by the 13th Finance Commission.

 

It would suggest measures for maintaining a stable and sustainable fiscal environment consistent with equitable growth including suggestions to amend the Fiscal Responsibility Budget Management Acts.

 

With regard to debt-stressed states, the Commission has been asked to suggest steps for augmenting revenues of states which are lagging.

 

"The taxation efforts of the Central government and each state government and the potential for additional resource mobilisation to improve the tax-Gross Domestic Product ratio in the case of the Union and tax-Gross State Domestic Product ratio in the case of the States" would also be part of the recommendations of the Finance Commission.

 

Besides, it would suggest the level of subsidies that would be essential for sustainable and inclusive growth and sharing of burden between the Centre and states.

 

Among other things, the Commission has also been asked to review the non-salary expenditure of states and recommend steps for upkeep of capital asset.

 

The need for making the public sector enterprises competitive and market oriented, listing and disinvestment, and relinquishing of non-priority enterprises would form part of the recommendation.

User

We are listening!

Solve the equation and enter in the Captcha field.
  Loading...
Close

To continue


Please
Sign Up or Sign In
with

Email
Close

To continue


Please
Sign Up or Sign In
with

Email

BUY NOW

The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)