HSBC Infrastructure Fund

HSBC Infrastructure Fund has delivered strong long-term returns, with a 10-year XIRR of 19.06% and a 12-year XIRR of 18.44%, consistently outperforming the NIFTY 50 benchmark by a wide margin (e.g., 10-year alpha of 6.33%). Over the last 1 year, the fund's XIRR of 24.73% is significantly higher than the category average of 13.57%, indicating robust recent performance. However, the fund's 1-year CAGR of 13.01% versus the benchmark's -1.08% shows that while it has outperformed, the absolute return is modest compared to its longer-term averages.

The fund exhibits moderate volatility with a beta of around 0.93 to 1.14 across various periods, indicating it moves broadly in line with or slightly more than the market. Its maximum drawdown of -50.32% is substantial, with a recovery period of 420 days, highlighting the potential for significant losses during market downturns. The Calmar ratio improves with longer holding periods, reaching 0.38 at 12 years, suggesting that risk-adjusted returns become more favorable for long-term investors.

The fund is concentrated in infrastructure-related sectors, with top holdings in power (NTPC), construction (L&T), and defense (Bharat Electronics, HAL), reflecting a thematic focus. The top 10 holdings account for about 51.5% of the portfolio, indicating moderate concentration, while the top 5 sectors (Electrical Equipment, Industrial Products, Construction, Aerospace & Defense, Power) represent over 61% of assets, underscoring a high sector concentration. This lack of diversification across sectors increases vulnerability to sector-specific downturns.

The fund consistently outperforms its category average across all time horizons, with XIRR advantages ranging from 0.6% (5-year) to 11.2% (1-year). Its long-term track record (10-year and 12-year) shows superior returns relative to peers, indicating strong fund management. However, the fund's performance is cyclical, as seen in calendar year returns with sharp swings (e.g., -16.2% in 2018, +60.67% in 2017), which may deter risk-averse investors.

This fund is suitable for investors with a high risk tolerance and a long-term investment horizon of at least 7-10 years, given its significant drawdowns and sector concentration. It is best suited for those seeking exposure to India's infrastructure growth story and willing to accept volatility for potentially higher returns. Investors should be prepared for periods of underperformance, as evidenced by negative returns in 2013, 2018, 2019, and 2025.

• Consistent long-term outperformance over the benchmark and category, with 10-year and 12-year XIRRs above 18%.
• Strong upside capture in rising markets (e.g., 116.63% in 3-year period) while maintaining lower downside capture in most periods, indicating favorable risk-adjusted performance.
• Low expense ratio of 1.02% for a sectoral fund, which is competitive and helps in net returns.

• High sector concentration in infrastructure-related industries, which can lead to significant drawdowns (max drawdown of -50.32%) and volatility.
• Inconsistent calendar year performance with negative returns in several years (2013, 2018, 2019, 2025), which may test investor patience.