HSBC Mutual Fund is all set to launch its third equity fund, this time a mid-cap fund. Named as HSBC Midcap Equity Fund (HMEF), the scheme aims to generate long-term capital growth from an actively managed portfolio of equity and equity-related securities, primarily mid-cap stocks. It has the freedom to move a part of assets towards fixed income securities if the fund manager becomes cautious or negative on the equity markets.
The unique feature of the offering is that the fund would stop accepting applications once it crosses Rs 700 crore mark. The AMC justifies that this cap is required in order to safeguard the investors from the potential risk of liquidity issues and higher impact costs.
HSBC Midcap Equity Fund plans to invest in select sectors based on the research team's analysis of business cycles, regulatory reforms, competitive advantages and so on. The fund manager will focus on the fundamentals of the business, the industry structure, the quality of management, corporate governance trends, sensitivity to economic factors, the financial strength of the company and key earnings drivers. The fund would be benchmarked against CNX Midcap 200 Index.
The fund's IPO opens on April 12, 2005, and closes on May 3, 2005. The minimum investment has been fixed at Rs 5,000. The fund would charge an entry load of 2.25 per cent on all investments below Rs 5 crore and none above that. The entry load is applicable during the IPO period as well.
