Best HSBC Equity Mutual Funds

For over 18 years, HSBC Mutual Fund has proffered many investment instruments across equity, fixed-income and hybrid categories. The company’s investment ideas and expertise have them managing over Rs. 10000 crore in assets under management spread across 54 schemes. 

HSBC Mutual Fund has over 30 mutual fund schemes catering to various preferences like liquidity, wealth creation and growth. 

An equity mutual fund invests primarily in stocks to generate high returns. They usually invest at least 65% in equity stocks and shares, while the remaining is usually is invested in money market or debt instruments. The best HSBC equity mutual funds come with high risks compared to hybrid or debt funds but generate aggressive returns to beat market growth and inflation. HSBC Mutual Funds offers over 8 equity mutual funds, allowing investors to generate high returns. 

While equity funds attract more risks than other types of MF, they also offer the highest returns. Further, they are deemed safer than direct investment into stocks owing to the diversified portfolio. 

Equity funds, therefore, make for a sensible choice for budding investors to earn generous profits without having an in-depth understanding of the stock market. Professional fund managers with high levels of expertise and experience in stock markets manage these funds. Moreover, the best HSBC equity mutual funds allow investors to diversify their portfolios with minimum investment. 

Based on their investment approach, equity funds can be classified into two types – active and passively managed funds. For active equity funds, fund managers seek out the best stocks to invest in. Whereas, in passive funds, they build the portfolios at par with popular market indices like Nifty 50 or Sensex. 

The type of equity funds can also depend on the valuation of company stocks. These include large-cap, mid-cap, small-cap, micro-cap and multi-cap funds. The large-cap funds invest in the stocks of well-established companies and generally offer stable returns, while the small-cap funds are volatile but have the potential for higher returns. Equity funds can also be thematic/sectoral or diversified in their asset allotments. 

Factors to Consider Before Investing

The following are a few essential factors to consider before investing in the best HSBC equity mutual funds.

Performance: The primary purpose of investing in equity funds is to grow wealth at above inflation rates. While these funds carry a high capital risk, the returns of 10 to 12% can make the proposition worthwhile for investors. 

Risks: Equity funds carry significant risks and are recommended for investors who are willing to assume them. While these might not work well as highly liquid or regular income investments, they tend to offer more returns for idle money. Generally, the top HSBC equity mutual funds generate maximum returns when they are held for the long run. 

Role of fund managers: In equity funds, fund managers play a key role in researching companies and finding the best stocks. They distribute assets in line with financial goals and make buying and selling decisions to take advantage of market movements. Therefore, it makes for a good idea to conduct thorough research on the experience and profile of the fund manager before investing in the best HSBC equity mutual fund. 

Financial goals: Equity funds work best for risk takers and those with a long-term financial goal of five or more years. Investing for a longer duration offers funds better chances to combat market fluctuations. Aspiring investors will find equity funds suitable since they allow them to get familiar with the stock market and assume lower risk than direct investment into stocks. Market-savvy investors will also find success with these types of funds as it will allow them to make long-term investment plans. 

Cost analysis: The expense ratio is a percentage of the investment that the fund managers charge to monitor funds. This number usually does not exceed 2.25%. The best HSBC equity mutual funds have lower expense ratios. Nonetheless, it’s important to note that a higher expense ratio helps asset managers actively manage funds. 

Taxability

Another important factor to consider is the taxability of an equity mutual fund. How a mutual fund is taxed directly influences the returns availed from it. 

Short-Term Capital Gains Tax (STCG): Funds with a holding period of less than one year can be classified as short-term. STCG from these funds is taxed at the rate of 15%. 

Long-Term Capital Gains Tax (LTCG): LTCG is applicable for funds with a holding period of more than a year. These are taxed at a 10% rate without any indexation benefit. However, returns of up to Rs. 1 lakh from these funds are exempt from taxation. 

TDS: Asset Management Companies deduct 10% from dividends exceeding Rs. 5000 as TDS.

ELSS (Equity-Linked Savings Scheme): Investment in ELSS schemes qualify for tax deductions up to Rs. 1.5 lakh under Section 80C of the ITA, 1951. 

These are some of the essential pointers an individual needs to note before opting to invest in the best HSBC equity mutual funds 2023.