HSBC Tax Saver Equity Fund

HSBC Tax Saver Equity Fund is managed by Aditya Khemani. Investing in this fund enables the investors to avail the income tax rebate, as permitted from time to time. The fund is not bad to hold in one’s portfolio for tax-saving and goal planning but if you are a new investor you can skip this one for the best funds in this category. 

Where does HSBC Tax Saver Equity Fund invest your money?

HSBC Tax Saver Equity Fund is a multi-cap fund which means most of your money will be invested in stocks of medium and large sized companies. Mid-size stocks can give kicker returns as they turn into large stocks but this happens not so frequently. About 62% of the fund’s money is allocated to stocks of large size companies, 31% of the fund’s money is allocated to stocks of mid-size companies and 7% to those of small size companies.

Suitable for what?
  • Saving on tax outgo
  • Child's education
  • Child's marriage
  • Planning for retirement
Not suitable for?
  • Creating wealth
  • Short term needs
  • Lifestyle needs
How much to invest?

Minimum one time investment is Rs 500 and minimum SIP is Rs 500 per month. You can make HSBC Tax Saver Equity Fund as part of your core portfolio. Core portfolio is the investment that is made for your basic goals and makes up about 70% of your investment portfolio. Do not make the mistake of investing in too many mutual fund schemes. At any point of time do not have more than two mutual fund schemes in your core portfolio.

Our recommendation for fresh investment
Not Recommended
Our recommendation for existing investment
Recommended
How has HSBC Tax Saver Equity Fund performed in the past?

If you had invested Rs 1 lakh five years back it would have become Rs 1.48 lakhs. Assume you had invested Rs 10,000 every month in HSBC Tax Saver Equity Fund through SIP for the past 5 years today you would have around Rs 7.36 lakhs.

How will HSBC Tax Saver Equity Fund perform in the future?

Needless to say no one can predict the future of markets. We have firm belief in the future prospects of the Indian economy. If the Indian economy grows at 9% then the leading companies tend to de well. When the companies do well their stock prices follows their performance. So if you expect the economy to grow at 8% then you can expect top performing mutual funds to give you returns in excess of 14%.

Mutual fund schemes that have exposure to mid-size companies tend to show results when their bet on few companies comes true. We advise you to avoid too much of star gazing and future prediction. Be reminded that equities are one of the asset classes that have the potential to beat inflation. Your aim for core portfolio should be to beat inflation.

When to review the performance?

Once you invest in the fund do not get into the habit of checking the NAV daily or monthly. Review the performance once a year. Too much attention is not good.

What charges apply?

A onetime fee of Rs 100 is charged on investments over Rs 10, 000 made through distributors. If you are a first time investor in mutual funds an additional Rs 50 is charged to cover KYC expenses. This is deducted from your investment and can be skipped if you buy directly from the mutual fund via their website or offices.

If units are sold within a year an exit load of 1% is deducted from your total returns. No exit load applies for units withdrawn post one year. Expense ratio of HSBC Tax Saver Equity Fund is 2.72%. This is charged to recover the fund management company’s expenses on securities’ transactions, commissions, registrar fees, etc. Your mutual fund returns will be total returns less expense ratio.

When to exit?

There is a lock-in period of 3 years on this fund, which means that you cannot sell these funds within 3 years of your purchase date. Withdraw when your goals are closer to achievement. Do not remove the money when the markets go up or down. Do not panic. Stick to your goals.

What are the tax implications?

The returns in a mutual fund are absolutely tax free, provided you did not withdraw within 1 year. HSBC Tax Saver Equity Fund qualifies for sec 80C ELSS benefits, which means you can invest up to Rs 1 lakh a year in this fund and deduct the amount from your gross total income for computing income tax.

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