HSBC Floating Rate Fund
Why debt funds?
The world of investing can be a cold, chaotic, and confusing place. Markets can play havoc with your investments from time to time. It is therefore very critical to be disciplined with your investments so that the downside risk is controlled. This means adopting fundamental financial concepts diligently and consistently while making your investments.
Some of the most important of these are the concepts of Risk/Return Tradeoff, Portfolio Diversification and Asset Allocation, and Tax Planning. These concepts explain the need to diversify investments across various asset classes to minimise risk and improve tax efficiency thereby highlighting the need for investments in debt funds.
There are several reasons why one should look at debt as an asset class to invest in. Some of the main reasons are:
- Need to balance risk and return - The Risk/Return Tradeoff
- Need to diversify - Portfolio Diversification and Asset Allocation
- Need for Tax Planning
Hardening interest rates could affect your precious investments
Over the past few years, we have seen some unprecedented changes in the financial sector. For an investor like you, lowering of interest rates could have given you good returns on your investment in bond funds and other such investments. But with inflation acting up, there are fears of interest rates hardening. Interest rates and bond prices have an inverse relation. In case interest rates go up, the value of your holdings fall and vice versa. Which means many investment options that have been yielding you good returns suddenly start generating negligible or even negative returns with the hardening of interest rates.
The HSBC Floating Rate Fund
The HSBC Floating Rate Fund (HFRF) seeks to provide reasonable returns with commensurate risk. Unlike in many other funds, the interest rate on investments made in this fund is adjusted periodically to ensure that your money generates market-related returns, without compromising on its security.
Why investors like you should take advantage of HFRF?
In the current interest rate scenario, people like you who do not want to risk venturing into the equity markets have limited options. You are used to bond/income/debt funds generating positive returns. However, in the past few months you may have experienced nil or even negative returns causing you tremendous worries and uncertainty. However, with HFRF you will be linked to market-related returns most of the times.
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Name of the scheme |
HSBC Floating Rate Fund |
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Investment objective |
Investment Objective HSBC Floating Rate Fund is an open-ended income scheme seeking to generate reasonable returns with commensurate risk from a portfolio comprised of floating rate debt instruments and fixed rate debt instruments swapped for floating rate returns. The scheme may also invest in fixed rate money market and debt instruments |
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Plans |
Long Term Plan - Regular and Institutional |
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Options |
Long Term Plan - Regular Option with monthly dividend (payout/reinvestment) and growth sub-options, Institutional Option with weekly(only reinvestment), fortnightly (only reinvestment) and monthly (payout/reinvestment) dividend and growth sub-options. Weekly dividend will be reinvested whereas an investor in monthly dividend can opt for payout / reinvestment. |
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Date of allotment |
16 November 2004 |
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Minimum application amount |
Long Term Plan - Regular - Rs 10,000 |
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Minimum additional investment |
Rs 1000 and multiples of Rs 1 thereafter for Long Term Plan Regular. |
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Load structure (including SIP/STP where applicable) |
Long Term Plan Exit Load |
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Transparency |
NAV will be determined on every business day. NAV of the Scheme/Option(s) shall be made available at all Investor Service Centres of the AMC. The AMC shall have the NAV published in a daily newspapers and updated on the AMC's website www.assetmanagement.hsbc.com/in |
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Systematic investment plan |
Minimum Investment Amount |
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Systematic encashment plan |
Monthly/Quarterly. NAV as on first business day of each month. |
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Cut-off time^ |
Long Term Plan |
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^ In respect of purchase of units with amount equal to or more than Rs 1 crore, irrespective of the time of receipt of application, the closing NAV of the day on which the funds are available for utilisation shall be applicable. |
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Minimum redemption amount |
Rs 1000 and multiples of Rs 1 thereafter for Long Term Plan Regular. Rs 10,000 and multiples of Rs 1 thereafter for Long Term Plan Institutional. **Minimum transaction amounts in SIP/STP, as may be available in various schemes may differ from the amounts mentioned herein. |
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Mode of holding |
Single, Joint, Anyone or Survivor |
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Nomination facility |
Available to individuals for single/joint holding |
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Redemption |
Within ten working days of the receipt of the redemption request at the Official Points of Acceptance of Transactions of the Registrar and the AMC. The Fund would endeavour to effect redemption payouts (net of applicable taxes) within one business day under normal circumstances |
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Asset allocation |
Long Term Plan 65-100 per cent in floating rate instruments and money market instruments (including fixed rate instruments swapped for floating rate returns) and 0-35 per cent in fixed rate debt instruments (including floating rate instruments swapped for fixed rate returns). |
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Dividend frequency |
Declaration of dividend and its frequency will inter-alia depend upon the distributable surplus. Dividend shall be generally decided weekly and for HFRF-LT (institutional option) and monthly for HFRF-LT (regular option). |
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Purchase redemptions |
All business days |
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NAV calculation |
All business days |
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Fund manager |
For Long Term Plan - Sanjay Shah and Ruchir Parekh |
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