Investing in ESG Funds are considered to be ‘sustainable’ investing. They are essentially schemes that invest into companies that rank high on the environment, social and good governance practices.
ESG schemes have gained popularity since 2018 in India. While there are many ESG funds in the market, the Quantum India ESG Equity Fund is one such fund that was the frontrunner in the market. Since then, several players have entered the market. As per AMFI data in December 2020, the combined assets under management of existing ESG funds in India are at Rs. 9,516 crores.
Socially Responsible Investing (SRI), was the predecessor to ESG mutual fund. Investors are beginning to recognize the importance of weighing both financial and non-financial metrics while making investment decisions. They well understand that a lack of foresight on risk and responsibility management eventually translates into lower profitability and valuation. ESG investing aims to achieve the triple bottom line that is good for the people, planet and profits. ESG investing allows investors to express their own values and to ensure that their savings and investments reflect their preferences, without compromising on returns.
Mutual funds that incorporate ESG screening criteria in their equity selection prove to be better long-term custodians of investor’s capital, provide downside protection, and generate better long-term risk-adjusted returns for your clients.
it is important to evaluate where the companies that the equity scheme invests in face the risk on account of ESG parameters, as ignoring these risks can have far-reaching consequences.
One might argue that responsible investing is just a passing trend. But a closer look at how the trend has gained momentum over the past 15 years suggests otherwise.
How to invest in ESG Equity Mutual Fund
While ESG equity investments should be on your investment portfolio, it’s best to invest in equities in a staggered manner to counter uncertainty and average out the cost of buying.
This is where systematic investment plans (SIPs) in mutual funds can help you make a disciplined investment route of investing in mutual funds.
Disclaimer, Statutory Details & Risk Factors:
The views expressed herein this article/video are for general information and reading purpose only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. Quantum AMC / Quantum Mutual Fund is not guaranteeing / offering / communicating any indicative yield on investments made in the scheme(s). The views are not meant to serve as a professional guide/investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The article has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and views given are fair and reasonable as on date. Readers of this article should rely on information/data arising out of their own investigations and advised to seek independent professional advice and arrive at an informed decision before making any investments.
Mutual fund investments are subject to market risks read all scheme-related documents carefully.