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Hsbc — HSBC Asset Management (India) Private — Investor Presentation (September 2018)
32 slides from Hsbc's investor presentation, September 2018
Slide 1: Life needs balance. So do your investments
Life needs balance. So do your investments HSBC Equity Hybrid Fund | NFO open from: 28 Sep - 12 Oct 2018
Slide 2: Where are we today?
Where are we today? Above average equity valuations + Attractive bond yields + Political uncertainty Price to Earnings - Nifty Nifty PAT Growth % 29 24 19 1514 12 10 11 10 8 9 7 7 6 5 5 5 2 0 0 1 -2 -1 -3 -3 -6 -7 -8 -12 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3
Slide 3: Equity offers long-term wealth creation opportunity
Equity offers long-term wealth creation opportunity Equity has proven to be one of the best asset classes for long-term wealth creation. – S&P BSE Sensex has returned 14% annualised returns, on an average, for a 20-year holding period on a daily rolling basis 20.00% Average rolling returns 18.00%
Slide 4: Volatility exists in the short run
Volatility exists in the short run Equity provides a wealth-creation opportunity over the long term, but can erode wealth in the short term owing to volatility. Therefore, it is prudent to go long. 120% 100% 1-years rolling 80% 5-years rolling Annualised returns % 60% 10-years rolling 40% 20% 0% -
Slide 5: Short term volatility can be reduced too
Short term volatility can be reduced too Exposure to both asset Extreme volatility of Fixed Income asset classes reduces the equity can reflect class provides stability short term volatility and temporary erosion of even in the short term provides the right investment balance to the portfolio Fixed
Slide 6: Different seasons have different winners
Different seasons have different winners Every season the winner changes hands in the financial markets. • Asset classes (equity and debt) perform differently under different market situations. • Dependency on a single asset class could be risky and instead, diversification helps minimise potentia
Slide 7: Optimal asset allocation for wealth generation
Optimal asset allocation for wealth generation 20% 18% Equity 16% E 80% – D 20% E 70% – D 30% 14% E 65% – D 35% Potential additional risk 12% E 50% – D 50% to generate returns Returns E 35% – D 65% 10% E 30% – D 70% 8% E 20% – D 80% 6% Debt 4% 2% 0% 0% 5% 10% 15% 20% 25% Risk Right asset allocation
Slide 8: Optimal asset allocation best suited for long-term investors
Optimal asset allocation best suited for long-term investors • With appropriate asset allocation between equity and debt, benefits of diversification can be seen, particularly in the market downtrend. • The analysis below shows that during bear phases, Portfolio B (70% equity and 30% debt) has perfo
Slide 9: Presenting, HSBC Equity Hybrid Fund (HEHF)
Presenting, HSBC Equity Hybrid Fund (HEHF) (Aggressive Hybrid fund – An open ended hybrid scheme investing predominantly in equity and equity related instruments) NFO Period 28 September - 12 October 2018
Slide 10: A solution for long term wealth creation
A solution for long term wealth creation HSBC Equity Hybrid Fund 70% An open ended aggressive hybrid scheme An asset allocation product with a mix of equity & debt Benefit from growth potential of equities 30% Benefit from lower or reduced risk/volatility due to debt exposure Investment in e
Slide 11: Fund placement in potential risk-reward matrix
Fund placement in potential risk-reward matrix Striking the right balance in between RETURN Thematic Funds Mid and Small Cap Funds Large Cap Funds HSBC Equity Hybrid Fund Long Duration Funds 1 Gilt Funds 2 Dynamic Bond Funds Short Duration Funds 3 Liquid Funds # RISK HSBC Equity Hybrid fund is place
Slide 12: HEHF's investment approach
HEHF’s investment approach Asset allocation strategy with right balance between equity & debt Optimal asset allocation – exposure to two different asset classes to strike the right balance between Growth & Stability Flexi-Equity strategy - sector agnostic style of investments with a flexi-cap st
Slide 13: Why flexi-cap equity strategy?
Why flexi-cap equity strategy? Capitalising on the opportunities across the market spectrum Performance Flexi cap strategy can invest across market spectrum depending on prevailing opportunities which can provide performance consistency Volatility Ability to maintain portfolio volatility at reas
Slide 14: Bringing performance consistency
Bringing performance consistency Flexi-cap strategy can outperform in different time periods 150.0 Large Cap Mid Cap 100.0 Small Cap 50.0 0.0 2005 2006 2007 2009 2010 2012 2013 2014 2015 2016 2017 -50.0 2011 2008 -100.0 – Large cap stocks were the leaders in 2006, 2008, 2010, 2011 & 2013 – Midcap st
Slide 15: How do we construct a portfolio?
How do we construct a portfolio? Placement of stocks through proprietary PBRoE process makes it more efficient PB of stocks Inflated Buy Growth Buy Value Buy Best Buy RoE of stocks Underweight / Overweight position of market cap segments Mutual fund investments are subject to market risks, read all
Slide 16: Potential opportunities in equity
Potential opportunities in equity Flexi cap strategy Large cap There is a concentrated performance on a YTD basis in Large Cap indices and there could be a case for wider participation going forward. Mid & Small cap This segment continues to be more bottom up and a sharp correction in mid & smal
Slide 17: Focus themes in equity
Focus themes in equity Opportunities across sectors Sector Category Rationale Financials O/w • Private banks & select NBFCs • Shift in market share away from PSBs • Expectations of deleveraging amongst India based companies Materials O/w • Metals (both ferrous and non-ferrous) due to improved cash f
Slide 18: Why optimal duration strategy?
Why optimal duration strategy? Freedom to position the portfolio favorably Performance Potential to capture the superior risk adjusted performance due to flexibility to move allocation towards favorable duration instruments Volatility Potential to avoid extreme risks as the fund manager would ai
Slide 19: Potential opportunities in debt
Potential opportunities in debt Optimal duration strategy Yield Curve % 10.00 8.74 8.75 8.88 8.91 8.88 8.83 8.81 8.84 8.79 8.87 9.00 8.41 7.34 7.61 8.00 8.06 8.10 8.12 8.20 8.16 8.17 8.35 7.00 7.83 7.97 8.02 7.50 6.00 6.84 7.08 3M 6M 1Y 2Y 3Y 4Y 5Y 6Y 7Y 8Y 9Y 10Y 15Y Government of India Yield PSU A
Slide 20: Who should invest in HEHF?
Who should invest in HEHF? Suited for all types of investors Cautious - New to equity HEHF is well suited for investors with no equity exposure due to volatility associated with equity asset class. HEHF can provide higher return potential with lesser volatility. Moderate – Measured equity exposure
Slide 21: HEHF provides wealth-building opportunity
HEHF provides wealth-building opportunity Prudent asset mix offers comparative risk adjusted performance across all timeframes Aggressive hybrid portfolio - as represented by the S&P BSE 200 TRI Index (70% weightage) and CRISIL Composite Bond Fund Index (30% weightage) – has been at par with equit
Slide 22: Why should you invest in HEHF?
Why should you invest in HEHF? To be a disciplined investor Optimal asset allocation Get exposure to two asset classes in one fund which are not just different, but complementary Asset rebalancing Maintain the desired asset allocation level in your portfolio with asset rebalancing Dual advantage
Slide 23: HSBC Equity Hybrid Fund (HEHF) fund snapshot
HSBC Equity Hybrid Fund (HEHF) Fund snapshot To seek long term capital growth and income through investments in equity and equity related securities and fixed income instruments. However, there is no assurance that the investment objective of the scheme will be achieved. An open ended hybrid scheme
Slide 24: Market Overview
Market Overview HSBC Global Asset Management 23
Slide 25: Encouraging signs of equity investments
Encouraging signs of equity investments India GDP estimated - 2024 IMF GDP Projections for 2018 US 2.9 India Japan Russia UK 1.4 1.7 1.0 7.3 Brazil China zone Euro 2.2 6.6 1.8 -3.0 2.0 7.0 12.0 India’s GDP growth prospects are bright – Global financial agencies are optimistic about India’s growth pr
Slide 26: Strong expectations on corporate earnings
Strong expectations on corporate earnings Nifty EPS – expect reasonable rebound in FY 19-20 FY19-20E: 22% CAGR 26% FY08-18: 19% 688 5% CAGR 547 FY01-08: 21% 459 CAGR 406 413 423 369 394 348 315 281 251 236 247 169 184 131 73 78 92 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14
Slide 27: Equity valuations
Equity valuations Reasonably valued cash-rich companies are well positioned in current markets Price to Earnings - Sensex Price to Book - Sensex ROE - Sensex Trend in India’s market-cap-to-GDP (%) Moderate valuations in large caps – Sensex trades at a 12M forward P/E of 20x, at a premium to long-per
Slide 28: Liquidity to support markets
Liquidity to support markets Domestic equity inflows show visible expansion FII Equity FIIs Vs Domestic MF (Equity) (USD bn) Dom MF Equity 6.00 5.00 4.00 3.00 2.00 1.00 0.00 -1.00 -2.00 -3.00 Apr-14 Apr-15 Apr-16 Apr-17 Apr-18 Oct-14 Feb-15 Oct-15 Feb-16 Oct-16 Feb-17 Oct-17 Feb-18 Jun-14 Aug-14 Dec
Slide 29: Equity market outlook
Equity market outlook Constructive on India growth story GDP growth rebounds and economic activity normalizing after negative impact of Demonetization disruption, GST transition and Corporate sector deleveraging wanes. Government steps to address the growth issues, the bank recapitalization, and
Slide 30: Debt market outlook
Debt market outlook Short duration funds are favorable RBI’s Monetary Policy Committee (MPC) minutes released in the middle of the month was largely on expected lines. GST collection continues to remain lower than the INR 1 trillion per month target. The reason has been cited as postponement of
Slide 31: Disclaimer
Disclaimer This document has been prepared by HSBC Asset Management (India) Private Limited (HSBC) for information purposes only and should not be construed as an offer or solicitation of an offer for purchase of any of the funds of HSBC Mutual Fund. All information contained in this document (inclu
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