HSBC PMS is the portfolio management services stream of the 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 services to large institutional investors, High Net-worth individuals, and insurance companies.
HSBC Global Asset Management appoints 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. The HSBC review section will help you to give a brief regarding HSBC PMS.
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 focuses on the following important fundamentals.
- Higher return on equity (ROE) and free cash flow.
- Performance and quality of management.
- Value of the business.
HSBC PMS offers you a customized investment solution based on your investment worth and the full discretion of the portfolio manager. It is also based on an investor investment objective and risk appetite.
HSBC PMS offers four different types of PMS strategies that have a track record of performance.
The two out of four strategies of HSBC PMS have been 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 HSBC PMS 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
In this section, we are going to discuss the HSBC PMS Types that are offered by the organization.
HSBC offers three PMS Types services:
1. HSBC Discretionary PMS
In the HSBC discretionary PMS, 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.
The whole responsibility to make profits lies over the shoulders of the portfolio managers. The decision of selecting investment strategies is decided by the portfolio managers.
In other words, the investment portfolio of the client is managed at the full discretion of the portfolio manager.
The aim of investment under this type of PMS is Capital appreciation in the long term.
2. HSBC NON-DISCRETIONARY PMS
The HSBC non-discretionary PMS allows the clients to make investment decisions related to their portfolios.
The portfolio manager will act as a trader only. There is no role of portfolio managers in non-discretionary PMS, the decision-maker is the investor. But yes, an investor can take advice from a fund manager and if the suggestion given by a manager is liked by an investor he can implement that suggestion.
If a client wants, the portfolio manager can also provide their opinion to them and can apply the suggestion given by the fund manager if he thinks that will be profitable for him ( investor).
3. HSBC ADVISORY SERVICE
The client gets advice on buy/sell decisions from the company without any back-office support like trading, accounting etc.
HSBC PMS Fund 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 continues to date.
Before joining HSBC Asset Management company, he worked with IDFC Ltd as a Senior Vice President (Treasury). Jaya Nigam handles investment portfolios of clients and provides them with the best possible return on their investment.
HSBC PMS Products
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
HSBC PMS follows the bottom-up approach for portfolio investment. The company takes care of the following point for investing.
- The company invests in that company that has substantial business growth. And the stock is trading at a discount value to their intrinsic value.
- Works on the belief that a company raises over time. So, HSBC keeps patients 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 assess 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.
HSBC PMS Strategies
HSBC PMS provides its clients with different types of strategies that will assist the investor to reach their financial goals. Now, let’s start the discussion of all these strategies one by one.
1. HSBC LARGE-CAP STRATEGY
The HSBC PMS 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 stocks 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 a proven track record, quality management and potential for growth.
Normally, 15-20 stocks are added to the investment portfolio of large-cap strategy. And the performance of the strategy is measured against the benchmark ‘Nifty 50’.
2. HSBC SMALL-CAP STRATEGY
HSBC PMS 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 fundamentals, growth prospects and future earning expectations.
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.
3. HSBC MULTI-CAP STRATEGY
Under the HSBC PMS multi-cap strategy, stocks are selected from all types of the market cap like large-cap, mid-cap, and small-cap.
The focus of the strategy is to pick those stocks which have high growth prospects, no matter what the size of the 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 prospects, future growth, and a leading company in its sector. There is no foundation of a 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 returns or performance of HSBC PMS for:
- 3 years is 9%,
- HSBC PMS return is approximately 10% for 5 years,
- the performance of HSBC PMS is 13% for 7 years,
- And for 11 plus years, the performance of HSBC PMS 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 plans just like other portfolio management companies. The aim of developing different investment plans is to provide portfolio investment opportunities to every category of investors.
Whether they are high net-worth clients, medium or low net-worth clients.
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 HSBC PMS 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 of HSBC PMS, 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 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 of HSBC PMS is not for an individual investor. It fits 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 that 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.
HSBC PMS does not force their clients to select any model; they leave the decision upon them and let them figure out the best model for them.
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 PMS commission amount increases with the increase in the total profit earned and the commission amount decreases with the decrease in the total profit.
The profit-based model is the best commission model for the investors as the chances of profit earned increase.
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 the 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 transaction without any requirement just to charge the higher commission.
PREPAID COMMISSION MODEL
The commission under the 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
PMS Charges are various types of fees 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 a prepaid fee which is required to pay before starting the 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 services, especially to 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 categories 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 known for its service offerings. An investor can select the portfolio manager without searching for an option.
- The professionals 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 a month or more than this also.
In case you are looking to invest through promising portfolio management services, let us assist you in taking the next steps ahead:
The issue-resolving TAT of HSBC PMS is 8 working days.
HSBC PMS is a well-known portfolio management company. The company offers world-class portfolio management services to clients. They offer a flexible investment plan as well as the commission model.
There are so many benefits that 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.
2. Who can open a PMS account?
The portfolio management account can be opened by a company, Hindu undivided family, firm or an association.
3. What types of portfolio management service is offered by HSBC PMS?
HSBC PMS offers three types of portfolio management services to their clients i.e. Discretionary PMS, Non-Discretionary PMS, and Advisory PMS.
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