Investment Objective of HSBC Small Cap Fund
HSBC Small Cap Fund, formerly known as L&T Emerging Businesses Fund, seeks to generate long term capital growth for its investors from an actively managed portfolio of equity and equity linked securities of predominantly small cap companies. However, if the fund manager becomes negative on the Indian equity markets, a portion of the fund’s portfolio could be allocated towards fixed income securities.
Investment Strategy of HSBC Small Cap Fund
- The fund uses a bottom-up fundamental approach to identify small-cap stocks having high earnings growth potential to become mid and large caps companies in the future.
- The fund takes a disciplined investment approach, with “fundamental research” as its foundation of all investment decisions.
- It focuses on companies, which are attractive in terms of both profitability and valuation.
- The fund targets scalable businesses having proven management track record, strong execution capabilities and strong financials.
- Its stock selection process is based on proprietary research:
- The equity investment process follows three key stages – Stock Selection, Stock Analysis and Portfolio Construction.
- Both quantitative and qualitative filters are used to arrive at a list of investable stocks.
- Each stock idea is assessed based on three primary parameters: Environmental, Social, and Governance (ESG) factors, Business’ Quality and Valuation.
- Portfolio construction results from the aforementioned process and is monitored against a predefined risk matrix.
Who Should Invest in HSBC Small Cap Fund?
HSBC Small Cap Fund is best suited for:
- Investors seeking exposure to small cap segment for higher alpha generating opportunities
- Investors seeking to build a corpus generating inflation-adjusted returns for meeting their long-term financial goals
- Investors having a long-term investment horizon and seeking to invest predominantly in equity and equity-related instruments, including equity derivatives, in Indian markets, with a key focus on emerging small cap companies and select foreign securities.