The midcap segment in the stock market is quite interesting. While it holds the potential for higher returns than large caps or bluechip companies, at the same time, they are not as risky as the Smallcap ones. Moreover, investing in the midcap segment via mutual fund scheme makes it safer as your asset gets diversified amongst different midcap stocks along with other asset classes.  

Talking about mutual funds and the midcap segment, one such mutual fund scheme is HSBC MIDCAP FUND DIRECT PLAN – GROWTH, and this article will be revolving around the key details of this fund to help you understand how it is performing, the risks involved, investment process and lot more. 

Fund Management and Objectives

HSBC Midcap Fund Direct-Growth was launched on 1 January 2013, since which it has offered a return of over 18.91%. This is an open-ended equity scheme which primarily invests in the midcap stocks. This scheme’s investment objective is to grow capital over long-term by actively managing the equity and equity related instruments in the scheme. 

HSBC Midcap Fund Direct Plan – Growth is managed by – 

• Cheenu Gupta: She has been managing this fund since 26 November 2022. She holds a CFA Charter (USA) along with PGDBM in Finance and did her graduation (B.E.) in IT. Before joining HSBC Mutual Fund, she was associated with Canara Robeco Mutual Fund, TATA AIA Life Insurance Company, as a fund manager, ING Investment Management, where she worked as Senior Research Analyst, and more such places. Apart from managing this fund, she also manages an array of funds at HSBC MF, which includes HSBC Aggressive Hybrid Fund, HSBC Equity Savings Fund, HSBC Large and Midcap Fund, and more. 
• Venugopal Manghat: He has been managing the fund since 1 October 2023, and before joining HSBC MF, he was working with L&T Mutual Fund and Tata Asset Management Ltd. He holds an MBA in Finance and did his graduation in Mathematics. Apart from this scheme, he also manages multiple other schemes at HSBC Mutual Fund, which include HSBC Value Fund, HSBC Business Cycles Fund, HSBC Infrastructure Fund, and more. 

Excited about investing in the HSBC Midcap Fund? Open a free Demat account today!

How Does the HSBC Midcap Fund Work?

The HSBC Midcap Fund invests predominantly in midcap companies, which means it invests in companies ranked between 101^st and 250^th according to market capitalization. The fund managers segregate the whole process into three phases, which are stock selection, stock analysis, and then portfolio construction. They use a combination of quantitative as well as qualitative filters to shortlist stocks for the fund. Then they check the quality of the business, valuation, and ESG compliance of these shortlisted stocks, and then finalize upon the stocks which they would pick for the portfolio construction. 

Performance and Returns (As of 10 Mar 2025) 

HSBC Midcap Fund Direct-Growth has been performing consistently well over the years, except for the past six months, however, that is mostly due to overall negative sentiment in the market as a whole. The long-term returns of the fund look stable, especially for a 3 to 5-year tenure. Here is a snapshot of the returns – 

Time Frame	HSBC Midcap Fund Direct-Growth (%)	Category Average (%)
Since Inception	18.91	NA
6 Month	-19.59	-17.22
3 Month	-23.94	-17.87
1 Month	-8.73	-6.90
1 Day	-2.06	-1.43
YTD	-22.69	-15.39
1 Year	1.04	3.40
3 Year	18.97	19.41
5 Year	21.27	24.47
7 Year	13.55	16.22
10 Year	14.76	15.21

As you can see in the table above, the fund has been performing consistently, but compared to the category average, it has been offering lower returns.   

Investment Allocation (As of 31 Jan 2025)

The HSBC Midcap Fund Growth has 99.13% of its assets invested in equity and equity-related instruments while only 0.89% invested in cash and cash equivalent. 

Market cap-wise asset allocation 

• Giant cap – 11.18%
• Large Cap – 48.30%
• Mid-cap – 38.71%
• Small-cap – 1.81%

As of 31 January 2025, the fund had an average market cap of ₹66870 crore and it spans

across 71 stocks where the top 10 stocks make up 40.57% of its assets. 

Sectoral Allocation 

The fund invests across sectors offering a well-diversified portfolio, here are the top five sectors as of 31 January 2025 – 

Sectors	Allocation (%)
Industries	27.99
Financial Services	19.92
Technology	14.01
Consumer Discretionary	13.07
Healthcare	8.51

Stock-wise Allocation 

The top five stocks of the Kotak Small-cap Fund include – 

Stocks	Assets (%)
CG Power	5.03
Persistent Systems	4.64
PB Fintech	4.59
BSE	4.58
Dixon Technologies	4.25

Key Metrics 

As of 31 January 2025, the fund had an expense ratio of 0.69%, which is lower than the category average of 0.74%.

Fund Details	Information
AUM (Assets Under Management)	₹10753 Crore as of 31 January 2025
Category	Equity Fund, open-ended
Fund Manager	Cheenu Gupta & Venugopal Manghat
Exit Load	1% on units above 10% of investments redeemed within 365 days of investment
Entry Load	Nil
Minimum Investment	₹5000(Lump sum)₹500 (SIP)
Benchmark	Nifty Midcap 150 (TRI)

The HSBC Midcap Fund NAV as of 10 March 2025 stood at ₹354.4458. 

Risk and Performance of the HSBC Midcap Fund 

This fund is classified as a ‘Very High Risk’ fund, which indicates that the fund has the potential for higher returns but there will be high volatility as well. 

1. Standard Deviation (Std Dev %): It shows how much the returns vary from the average returns generated by the funds themselves. The higher this number, the more it fluctuates.

The Standard deviation of the fund is around 17.06% higher than the category average of 16.49%, depicting a bit more fluctuations. 

2. Beta: This ratio indicates the volatility of the fund’s performance, compared to similar funds in the market. The lower the Beta, the more predictable the returns are, and vice versa. It helps in comparing funds. 

The Kotak Smallcap fund has a beta of 0.93% while the category average is also 0.93% indicating similar volatility. 

3. Sharpe Ratio: This ratio indicates the return you get for the risk you’re taking. A higher number means better risk-adjusted returns.

Currently, this fund has a Sharpe ratio of 0.72%, while that of the category is 0.73%, which indicates that the fund has been offering a nominally lower risk-adjusted return. 

4. Sortino Ratio: It is similar to Sharpe but only looks at downside risk (the risk of losing money).

This fund has a higher downside risk compared to its peers. While the average for the category stands at 1.06%, this fund has 0.82% indicating higher downside risk and lesser risk-adjusted profits.  

5. Alpha: It measures the extra return the fund gives above the market’s average return.

The fund offers a better return compared to that of its peers as depicted by its Alpha of 0.40% while the average of the category is 0.11%. 

Taxation for HSBC Midcap Fund 

If you’re investing in the HSBC Midcap Fund, here’s how your returns will be taxed:

1. Short-Term Gains – If you sell the fund units within 1 year of the date of investment, a 20% tax will be levied on the entire return generated during the period. 
2. Long-Term Gains – If you sell the fund units after one year, any profit generated over and above ₹ 1.25 lakh will be taxable at a 12.5% rate. The same rate will be applicable for any investment tenure above 1 year. 

So, the longer you hold your investments, the better returns you can expect and the lesser effect of taxes!

3. Taxes on Dividends – Dividends earned, if any, will be taxable at the hands of investors as per their tax slabs. If the dividend income surpasses Rs. 5000 in a financial year, then the fund house will deduct 10% TDS before disbursing the dividend into the account of the investor. 

Minimum Investment and Lock-in Period

The minimum investment amount in the HSBC Midcap Fund is ₹5000 for lump sum and SIP, it is ₹500. There is no lock-in period for the HSBC Midcap Fund Direct-Growth.

How to Invest in HSBC Midcap Fund Direct?

You can invest in the HSBC Midcap Fund – Direct Growth plan with Shoonya. 

Shoonya offers a free Demat account,  Zero brokerage trading, advanced trading tools, 100+ technical indicators, and much more!

Investing in Lump Sum Mutual Funds through the Shoonya Web Platform

Here’s a quick guide on how to invest in lump sum mutual funds through the Shoonya web platform:

1. First, you must log in to your Shoonya account at trade.shoonya.com. From the “Orders” section, click on “MF order.”
2. Search for the fund you wish to invest in; in this case, the HSBC Midcap Fund – Direct Growth plan.
3. Choose “Fresh” for a new investment and enter the amount you want to invest.
4. You can complete your purchase by clicking the “Purchase” button.
5. You will receive a payment link on your registered email. Use the link to make the payment.

After payment, your mutual fund units will be allotted to your Demat account within T+2 days.

Note: You can only make the payment using the bank account registered with your Demat account.

Setting Up an SIP for Mutual Funds

If you prefer a Systematic Investment Plan (SIP) for HSBC Midcap Fund Direct Plan-Growth plan, you must follow these steps:

1. First, you need to log in to your Shoonya account at trade.shoonya.com. Go to “Orders” and click on “XSIP.”
2. Find the mutual fund for which you want to set up an SIP. In this case, the HSBC Midcap Fund – Direct Growth plan.
3. If this is your first SIP with Shoonya, you need to create a Mandate ID. 

For that, you must enter the mandate amount and the validity date (until you want to keep your SIP active).

4. You must submit the details, and you’ll receive a Mandate authentication link via email. Approval generally takes 24 hours.

Once your Mandate is approved, you can follow these steps to set up your SIP:

1. Go to “XSIP,” enter the SIP amount, and select “Fresh” as the transaction type.
2. Choose the date when the SIP will be debited directly from your registered bank.
3. The approved Mandate ID will auto-reflect.
4. Choose “Monthly” for monthly debits and specify the number of installments (e.g., 24 installments for a 2-year SIP).

If you do not want to forget your SIPs and invest systematically, the SIP method can be most suitable for you. 

Why Invest in the HSBC Midcap Fund?

The reasons for investing in the Kotak Smallcap Fund Direct-Growth can be the fund’s – 

• Higher alpha generating capabilities 
• Capital appreciation abilities
• Inflation-adjusted returns generation

Suitability of this Fund| Who Should Invest?

The HSBC Midcap Fund Direct is suitable for investors who:

• Are looking for higher returns and ready to take higher risk 
• Looking for long-term capital appreciation 
• Can stay invested for at least three to five years 
• Can tolerate several ups and downs in the fund

Conclusion

Thus, investors looking for higher than market returns but want to take calculated risks, can consider HSBC Midcap Fund Direct Plan for their portfolio. However, before investing, or starting your SIPs in this fund, make sure you check all the details of the fund above, and see whether it aligns with your investment goals or not. 

HSBC Midcap Fund Direct Plan-Growth plan | FAQs

Source: ValueResearch

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Disclaimer: Investments in the securities market are subject to market risks; read all the related documents carefully before investing.