AssetPlus NFO Review: HSBC Midcap Fund

by Anushi Jain

HSBC Mutual Fund has launched the HSBC Midcap Fund, which is open for subscription from September 6th, 2021 to September 20th, 2021.

Investment Objective: The investment objective of the scheme is to provide capital appreciation by investing in an underlying fund of equity and equity related instruments primarily in the midcap space

Benchmark: Nifty Midcap 150 Index TRI

Fund Philosophy

The fund will focus on 3 core themes:

Expansion: Expansionary theme to support small and midcaps

Innovative disruption: Innovative and new age companies with disruptive products and service ideas to grow faster.

Quality: Focus on quality Midcap companies by using the

4Q Approach -

Quality of Business - Scalability of business, Competitive Advantage, Market Share, Longevity, Pricing power, Brand strength

Quality of Management - Track record, Corporate governance, Promoter background, Capital allocation

Quality of Earnings - Consistency in earnings, Capital intensity, Cashflow

Quantum of Earnings - Strong growth in earnings

Portfolio Construction

Market cap:

The fund will invest atleast 65% in midcap stocks. Midcap stocks in the index comprise of the 101st to the 250th stock in terms of market capitalisation.

Why should you invest?

  1. Midcap stocks are expected to grow significantly higher during FY22 and FY23
  2. The economy is expected to go through an expansionary phase. Midcaps earnings rise faster relative to large caps when the cycle turns.

Midcap and smallcap stocks underperformed significantly through 2018 and 2019. The cycle has turned and both these categories are outperforming the large cap benchmarks. A low interest and high growth rate environment are extremely suitable for outperformance in midcaps. Investors with a high-risk appetite can allocate a portion of their portfolio to midcap funds for superior alpha generation over 5-7 years.

It is of utmost importance that the fund should be discussed with your financial advisor and then ascertain whether it is suitable to invest. Always read the scheme documents fully before investing.