The correction in the markets has been relentless over the past 4-5 months. With persistent selling by foreign investors, a slowing domestic economy, underwhelming corporate results and fears of the Trump administration’s trade tariffs have all played a part in bring down the market.

While indices across market caps have corrected 12-24 per cent, many stocks have fallen heavily by 30-50 per cent.

This decline in the market has brought out many pockets of attractive opportunities for value investors as multiples slid substantially, even in cases where quarterly results have been reasonable.

It may thus be a good time for investors to add a value fund to their portfolio. In this regard, HSBC Value has been a fund with a robust performance record of delivering consistently benchmark-beating returns. It has also done better than many peers in the category.

Like any other investment style, value can also underperform at times. However, it can be rewarding when fund holding periods are sufficiently long and investments are made via the SIP route.

Solid performance record

HSBC Value fund has a track record of over 15 years in operations. The scheme’s performance over the past decade places it among the most consistent performers across categories.

Over the past 1-year, 3-year, 5-year and 10-year timeframes periods, the fund has delivered 2.4 per cent, 20.9 per cent, 22 per cent and 15.8 per cent, respectively, on a point-to-point basis. This performance places it among the best funds in the category. The scheme outperformed the Nifty 500 TRI by 3-7 percentage points over the medium to long term.

When five-year rolling returns over the past the period January 2013 to February 2025 are considered, HSBC Value has delivered mean returns of 16.8 per cent.

Also, in the period aforementioned, on a 5-year rolling basis, the scheme has beaten its benchmark Nifty 500 TRI over 66 per cent of the time, which is healthy. It has delivered more than 12 per cent nearly 68 per cent of the time over this period and more than 15 per cent more than 54 per cent of the time.

The fund’s SIP returns (XIRR) over the past 10 years are fairly robust at 17.9 per cent. An SIP in its benchmark Nifty 500 TRI would have returned 14.6 per cent over the same period.

All return figures pertain to the direct plan of HSBC Value fund.

The fund has an upside capture ratio of 117.2, indicating that its NAV rises much more than the benchmark during rallies. But more importantly, it has a downside capture ratio of 92, indicating that the scheme’s NAV falls less than the Nifty 500 TRI during corrections. A score of 100 indicates that a fund performs in line with its benchmark. This is based on data from February 2022-February 2025.

Portfolio moves

HSBC Value fund takes broad-based approach to giving representation to stocks across market caps. With a flexi-cap approach, there is considerable investment made in small and mid-cap stocks, though large-caps dominate the portfolio . Mid and small-caps can account for 46-55 per cent of the portfolio across various market cycles. Of course, the largest holdings are in large-caps.

But the fund manages risks by taking a highly diffused approach to stock and sector holdings. Individual stocks even in the top five account for less than 5 per cent of the overall holding. Beyond the top five, the holdings are less than 2.5 of the portfolio. Even in the sector holdings, barring the top two, all segments make up less than 10 per cent of the fund’s assets.

Banks and IT-software have been the top sector holdings of the fund over the past few years, given that these segments haven’t rallied much even in the bull run and are reasonably valued. However, the other top preferences are churned depending on market conditions. So, pharma, cement and power figured prominently a few years ago. However, as these stocks soared and later corrected, the fund has preferred finance, realty and construction stocks in recent months for its top sector holdings.

The fund sticks to the value style and does not go heavy on momentum-driven stocks even in the small-cap segment.

With a diffused portfolio (of 70-plus stocks) and careful choice of stocks, the fund manages to keep risks moderate in its portfolio.

HSBC Value fund remains mostly fully invested and cash position is usually less than 2 per cent.

Overall, the fund is suitable for an investor with an above-average risk appetite and the ability to stay put for the long term.