HSBC PMS

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HSBC PMS

7.5

Team Background

7.5/10

Returns

8.0/10

Offerings Range

7.5/10

Charges

7.5/10

Customer Support

7.0/10

Pros

  • Flexible Investment Plans
  • Larger Focus on Institutional Investors
  • High Brand Equity
  • Reasonable Service
  • Wide Range of Strategies

Cons

  • Marginally High Pricing

HSBC PMS is the portfolio management services stream of HSBC group, one of the world’s largest banking and financial services. The HSBC group has a presence across 71 countries across the globe.

HSBC PMS Review

HSBC Global Asset Management started its portfolio management service in the year 2006.

The company offers various PMS services with advisory service to large institutional investors, High Net-worth individuals, and insurance companies.

HSBC Global Asset Management appoints its one out of four portfolio managers by the Employee Provident Fund (it’s mandatory). EPFO is seen as one of the worlds’ biggest PF institutions.

It helps the company to provide world-class portfolio managers to the clients.

The investment portfolio of the company follows some strict guidelines related to the PMS of the company which helps to minimize the risk and maximize the return of the portfolio. The company takes an investment decision based on the fundamentals of the stocks.

The company focus on the following important fundamentals.

  • Higher return on equity (ROE) and free cash flow.
  • Performance and quality of management.
  • Value of the business.

HSBC portfolio management service offers you a customized investment solution based on your investment worth and full discretion of the portfolio manager. It is also based on an investor investment objective and risk appetite.

The company offers four different types of portfolio strategies which has a track record of performance.

The two out of four strategies are running since its inception and the company stopped offering these two strategies (Alpha Account Signature portfolio and Strategic portfolio) in the year 2015.

Now, in this article, we are going to discuss different aspects of the company which is the most important to know for a PMS investor.

We will cover the types of PMS, strategies detail, managers detail, commission model, investment plans, charges, customer support, conclusion and FAQs.


HSBC PMS Types

HSBC offers three types of PMS service:

  • Discretionary
  • Non-discretionary
  • Advisory

Discretionary PMS:

In the discretionary portfolio management service, the whole decision related to the investment portfolio of the clients is taken by the portfolio manager. The portfolio manager holds the full right to add or remove a stock from the portfolio.

In other words, the investment portfolio of the client is managed on the full-discretion of the portfolio manager.

The aim of investment under this type of PMS is Capital appreciation in the long term.

Non-Discretionary:

The non-discretionary portfolio management service allows the clients to make the investment decision related to their portfolio.
The portfolio manager will act as a trader only.

If a client wants, the portfolio manager can also provide their opinion to them.

Advisory  service:

The client gets advise of buy/sell decision from the company without any back-office support like trading, accounting etc.


HSBC PMS Managers

The company has a team of experts who work round the clock for a better return out of the portfolio of the client’s investment. They use their expert knowledge and experience to provide an expected result to the investors. 

Though the company has many talented portfolio managers, here we will discuss the best fund manager of HSBC PMS.

Jaya Nigam (Vice president-Fund manager):

Jaya Nigam is appointed as a vice-president (Fund manager) of HSBC PMS. He joined the company in the year 2015 and continue to date.

Before joining HSBC Asset Management company, he worked with IDFC Ltd as a Senior Vice President (Treasury). Jaya Nigam handles investment portfolio of clients and provides them with the best possible return of their investment.


HSBC PMS Strategies

HSBC PMS was offering four products to the investors, but at the starting of 2015, the company stopped offering PMS products to individual investors. Those products are:

  • HSBC Alpha Account signature portfolio
  • HSBC Alpha Account strategic portfolio
  • HSBC Large Cap Oriented Portfolio
  • HSBC Select portfolio

Investment philosophy:

HSBC PMS follow the bottom-up approach for portfolio investment. The company takes care of the following point for investing.

  • The company invests in that company which have substantiality of business growth. And the stock is trading at a discount value to their intrinsic` value.
  • Works on believe that a company raise over time. So, HSBC keeps patient over the selected stocks, they are not market timers.
  • The process of investing has the power to provide a return over a long period of time.
  • The strategies are a blend of growth and value.
  • The company predominantly uses the ‘Buy & Hold’ strategy. To protect the portfolio from the potential downside they use F&O and Cash.
  • The investment process of the company starts with the meeting of management to asses the size, business opportunity, growth prospect of a company.

Now, the company works on three main strategies which are large-cap, mid-cap, and small-cap. All three strategies are created for the investors according to their risk profile and investment objective.

Now, let’s start the discussion of all these strategies one by one.

HSBC Large-Cap Strategy:

The HSBC large-cap strategy aims to invest in large-cap stocks which offer a constant and a certain return to the investors up to the maximum extent.

Those investors whose aim is getting a good return over the long run of investment with capital protection choose the large-cap strategy.

The selected stock under this strategy grow at a fast pace and are reasonably priced. The risk associated with the portfolio is reduced through the diversification of stocks and sectors.

The investment portfolio is created by those companies only which have proven track record, quality management and potential of growth.

Normally, 15-20 stocks are added in the investment portfolio of large-cap strategy. And the performance of the strategy is measured against the benchmark ‘Nifty 50’.

HSBC small-Cap strategy:

HSBC Mid-Cap strategy is created to invest in those stocks whose market cap is of small size. Those companies are in the initial stage of the business life cycle and on the track of earning well.

Small-cap companies have a great opportunity to grow in the future and they provide the return to the investor over a long period.

The fundamental analysis of the stock is done by the analysts of the company to pick the right stock for the portfolio.

The stocks are selected on the basis of their strong fundamental, growth prospect and future earning expectation.

The portfolio contains approx 25-30 stocks and the return provided by the strategy is measured against the benchmark of S&P BSE 200 Small Cap Index.

HSBC Multi-cap strategy:

Under the multi-cap strategy, stocks are selected from all types of market cap like large-cap, mid-cap, and small-cap. The focus of the strategy is to pick those stocks which have high growth prospect, no matter what the size of market cap.

The total number of stocks in the portfolio is about 15-20 stocks.

All types of stocks are selected based on high growth prospect, future growth and a leading company in its sector. There is no foundation of sector or company. 

The return under the strategy is measured against the benchmark S&P BSE 200.


HSBC PMS: Performance/Return

HSBC PMS has an outstanding performance of its investment portfolio. All the strategies offered by the company have performed well since its inception.

The portfolio management services return or performance of HSBC PMS for:

  • 3 years is 9%,
  • is approximately 10% for 5 years,
  • the performance of the company is 13% for 7 years,
  • and for 11 plus years, the performance is 18%.

Hence, we can see the performance of the company is quite attractive and an investor can select this company on the basis of its performance.


HSBC PMS Investment Plans

HSBC PMS also offers four types of investment plan just like other portfolio management companies. The aim of developing different investment plans is to provide portfolio investment opportunity to every category of investors.

Whether they are high net-worth client, medium or low net-worth client.

Here we are going to discuss four investment plans and their range:

  • Bronze- Rs.25,00,000 to Rs.50,00,000
  • Silver- Rs. 50,00,000 to Rs.1 Crore
  • Gold- 1 Crore to 5 Crore
  • Platinum- 5 Crore & above

Bronze: The first plan offered by the company is Bronze. This plan is created for the low profile investors. For those, who want to invest in PMS but, are not able to invest above Rs.50,00,000.

So, the company has provided them with an opportunity to start with Rs.25,00,000 to get a better return. The plan best suits the small income investor.

Silver: The range of investment under the ‘Silver’ plan is between Rs.50,00,000 to Rs.1 Crore. If you are the one who can bear risk more than the bronze investors then you are looking for the right plan.

In this plan, the risk associated with the portfolio is a bit higher and at the same time, the return is also higher.

Gold: The plan requires more investment amount than the above both investment plans. The range of investment amount under the Gold plan is Rs.1Cr to Rs.5 Cr.

Those investors who are ready to bear a moderately high risk in portfolio investment can opt for this plan.

Platinum: This plan is not for an individual investor. It fit the institutional investor who can invest above Rs.5 Cr and can bear higher risk also.

Under this plan, the amount invested by the company is highly diversified in sectors which help in risk minimization and higher return.


HSBC PMS Commission model

The commission model offered by HSBC PMS is flexible enough. The investors are allowed to choose the way of giving commission to the company according to their comfort.

Each model is designed on different bases such as on the basis of the total profit earned, the total volume of transactions completed within a year, and the total value of the portfolio.

Here is the name of the commission model offered by the company.

  • Profit-based commission model
  • Volume-based commission model
  • Prepaid commission model

Profit-based commission model:

The total profit earned to the investment portfolio of the client is the base of the commission charged under this model. The commission amount increases with the increase in the total profit earned and the commission amount decreases with the decrease in the total profit.

Profit-Based model is the best commission model for the investors as the chances of profit earned increases.

The portfolio manager puts his/her full effort to get profit to the portfolio as the commission of the portfolio manager increases with the increase in total profit and vice-versa.

Volume-based commission model:

The total volume of transactions completed by the portfolio manager of a client within a year is the base of commission to be paid under the volume-based commission model.

A portfolio manager takes into account the total transaction that has been completed by him against the investment portfolio. Based on that, a certain percentage of commission is charged.

It is very important to know how genuine the portfolio manager is because an unauthentic portfolio manager can increase the total number of the transaction without any requirement just to charge the higher commission.

Prepaid commission model:

The commission under prepaid commission model is paid on the basis of the total value of the portfolio created. A fixed percentage of commission is paid on the basis of total portfolio value and the percentage decreases with the increase of the total value of the portfolio.

The percentage of the commission under this model is generally lower than the above two commission models.

Now, the following table shows the percentage of the commission under each model:


HSBC PMS Charges

HSBC Charges various types of fee from the investors for the services they offer to them. These charges include the management fee, exit load fee, custodian charge, brokerage charge, upfront fee etc.

  • Management fee: The fee is charged for the portfolio management service offered by the company to the investors. It consists of an annual recurring fee and variable fee.
  • Annual recurring fee- 1.25% to 2.25% of daily Average AMU.
  • Variable Fee- 15% of the annualized performance of the portfolio above a predetermined rate charged by the portfolio manager as a performance fee. It depends on the fee structure opted by the client.
  • Upfront fee: The fee is just like prepaid fee which is required to pay before starting of PMS service. The fee ranges from 0% to 2.5%.
  • Depository fee, custodian fee, Registration and transfer agent fee, Brokerage and transaction fee, etc will be charged at its actual.

HSBC PMS Benefits

Here is a quick look at the benefits of portfolio management services from HSBC PMS:

  • HSBC PMS offers portfolio management service specially to the institutional investors. So it is a big point for the investors as they will get the full attention of the company or the experts.
  • The company offers a flexible investment plan for the different category of investors whether they are small-scale or large scale. They can choose the plan according to their convenience and risk profile.
  • HSBC is a brand name and known for its service offerings. An investor can select the portfolio manager without searching for an option.
  • The professional and experts of the company work day and night to catch the opportunity that arises in the market. They always remain active to add and remove security (as required) from the investment portfolio.
  • The customer support system of the company is amazing. They easily handle every query and problem of investor that arises to the investor.

HSBC PMS Customer Support

HSBC always takes care of its clients. The company has a very active customer support system. They promptly reply to their clients in order to solve their queries.

The company has given the facility of chat and call. The clients can clear their queries in either way.

A relationship manager is also appointed by the company. One can directly call them to know about their investment portfolio.

Depending on the total worth of the portfolio investment, a client can call the portfolio manager 3-5 times in a month or more than this also.

The issue-resolving TAT of HSBC PMS is 8 working days.


HSBC PMS Conclusion

HSBC PMS is a well-known portfolio management company. The company offers world-class portfolio management service to the clients. They offer a flexible investment plan as well as the commission model.

There are so many benefits which are offered by the company to their clients and that makes them a unique PMS company. The customer support offered by the company is of a superior class.

Overall, we can say HSBC PMS is the best option for you if you are looking to invest your hard-earned money in portfolio management.


HSBC PMS FAQs

Here is a quick look at some of the frequently asked questions about HSBC PMS you must be aware of:

What is a portfolio management service?

The PMS service is offered by the portfolio manager of a company to invest in stocks, Debt, Fixed deposit, Cash and other financial securities that are specifically created to meet the financial objective of an investor.

Who can open a PMS account?
The portfolio management account can be opened by a company, Hindu undivided family, firm or an association.

What types of portfolio management service is offered by HSBC PMS?

HSBC PMS offers three types of portfolio management service to their clients i.e. Discretionary PMS, Non-Discretionary PMS, and Advisory PMS.

In case you are looking to invest through a promising portfolio management services, let us assist you in taking the next steps ahead:

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