India is a key strategic market for us and we will continue to grow our business here, says Puneet Chaddha, CEO, HSBC Global Asset Management, India. In an interview with Ashley Coutinho, Chaddha advises investors to adopt an asset-allocation approach and assess their risk appetite before investing. Excerpts:

HSBC Global Asset Management, India, did away with exit loads for all its schemes in the early part of the year. Has it worked?

At HSBC, we are committed to treating our customers fairly. It is, therefore, critical that we do not create any exit costs for investors. Since March 2013, we have stopped exit loads for all MF schemes. Perhaps, we are the only amc in India to have taken such a step. We believe investors should stay invested in our schemes due to the benefits they see in the services we offer and not due to artificial exit barriers. Our investors and distributors have welcomed the initiative and our persistency of assets continues to be strong.

Your AMC posted a loss of R21.2 crore in FY13 compared with R27.7 crore in FY12. How do you plan to turn profitable?

India is a key strategic market for the HSBC Group and we continue to grow our business here. Our focus is not on the short term, but on how we can build a strong and sustainable business that is investor-oriented. We also want to keep things simple, so our strategy is to provide products that add value to clients, are suited to their needs, easily understood and fairly priced. Since September 2013, we have started sub-advising the India component of HSBC Global Asset Management?s offshore funds. This makes us one of the largest managers/sub-advisors of Indian assets, which should also reflect on our profitability.

Most of your equity schemes have lagged benchmarks in the past year. What are you doing to improve performance ?

At HSBC, we follow an investment philosophy that considers profitability of the companies against their prevailing valuations. We believe this framework will hold us in good stead over the long term. Most of our equity funds have significantly outperformed their benchmarks in 2012 as also in the last 3 and 6-month periods.

In 2013, equity markets noticed a significant bi-polarity ? while expensive stocks became more expensive, cheaper, good quality stocks continued to trade lower. This is counter-intuitive and we believe this could correct over the medium term, helping our equity portfolios ? where we remain committed to our long-term philosophy.

What are your plans for the year ahead? What kind of products do you plan to add to your bouquet?

We do not want to launch products unless we bring in something significantly different for investors. We have recently received approvals for two offshore feeder funds, which provide Indian investors a unique diversification opportunity. We are blessed with a strong parent and shall continue to draw upon our global expertise and bring products that are unique in nature.

What is your advice to investors at this point in time?

As always, it is prudent for retail investors to have an asset allocation plan and to be aware of their risk appetite. In light of the current situation, we think that allocation to hybrid products, such as MIPs and dynamic funds, may provide additinal fillip.

A bigger allocation to fixed income products may be prudent and increasing allocation to equities when we see sharp corrections seems like a logical strategy.

Enhancing risk assets progressively may prove beneficial for long-term investors who have a horizon of over 3 years. We hope that investors choose from products that possess a well-articulated investment philosophy and offer transparency with regard to investment strategy and positioning.