HSBC Consumption Fund

The HSBC Consumption Fund has delivered an overall XIRR of 11.46% over 1 year and 11.95% over 3 years, which is significantly below the category average SIP XIRR of 15.91% and 17.72% for the same periods. The fund's 1-year rolling return mean of 13.03% is also lower than the category's 1-year average, indicating underperformance relative to peers. Calendar year returns show volatility, with a strong 34.53% in 2024 but a negative -0.83% in 2025, highlighting inconsistent performance.

The fund has a maximum drawdown of -21.20% with a recovery period of 529 days, indicating substantial downside risk and a prolonged recovery time. The average drawdown is -5.75%, and there has been one drawdown event exceeding 10%, suggesting moderate to high volatility. The Calmar ratio of 0.61 for 1 year implies that the fund's return per unit of maximum drawdown is modest, reflecting a less favorable risk-adjusted performance compared to higher-returning peers.

The top 10 holdings account for approximately 45.65% of the portfolio, with the largest holding being Eternal Limited at 6.37%, followed by Bharti Airtel and Radico Khaitan. Sector concentration is high in consumer-facing industries, with Consumer Durables (17.9%), Automobiles (15.3%), and Retailing (11.4%) being the top three sectors, totaling over 44% of the portfolio. The fund holds 46 stocks, providing some diversification, but the thematic focus on consumption makes it sensitive to consumer spending trends.

The fund consistently underperforms its category peers, with its 1-year and 3-year XIRR trailing the category averages by 4.45 and 5.77 percentage points, respectively. The fund's performance has been inconsistent, as seen in the negative return in 2025 and a strong rebound in 2024, indicating a lack of stability relative to the category. Given the category's higher average returns across all time frames, the fund is positioned as a laggard in the thematic consumption space.

This fund is suitable for investors with a high risk tolerance and a long-term investment horizon (5+ years) who are willing to accept significant drawdowns and underperformance in exchange for exposure to the consumption theme. It may appeal to those who believe in the long-term growth of Indian consumer spending, but they should be prepared for periods of underperformance and volatility. Investors seeking consistent returns or lower risk may find better options in more diversified or better-performing thematic funds.

• Strong recovery from the 2024 drawdown, with a 34.53% return in that year, demonstrating potential for high upside in favorable market conditions.
• Diversified portfolio across 46 stocks, reducing single-stock risk, with top holding at only 6.37% of NAV.
• Focus on consumption sectors that have long-term growth potential in India, such as consumer durables and automobiles.

• Significant underperformance versus category averages, with 1-year and 3-year XIRR trailing by over 4 and 5 percentage points, respectively.
• High maximum drawdown of -21.20% and a long recovery period of 529 days, indicating elevated downside risk and potential for prolonged losses.