Of late the mutual fund industry in India is witnessing a huge inflow into the sustainable funds category. Here we will look at some of the aspects of these ESG or Environmental Social and Government funds.
What are ESG funds?
While the concept is not new internationally, the idea of ESG funds in India gained traction only recently i.e. since last year. Here in investor is provided a chance to invest in companies which focus on sustainability as well as look at the business from a holistic approach. Now here we detail:
E or Environment: Here the company focuses on the green and eco-friendly landscape. This can be through various efforts such as focus on water and energy conversation, effective waste disposal process and steps in reducing carbon emission.
S or Social: The social factor considers company's role in overseeing the well being of its employees as well as the larger society. To be socially compliant, the company would give importance to aspects such as staff welfare, pay parity, gender equality among others.
G or Governance: At the heart of this G or governance aspect is the corporate governance issue which considers all such aspects such as compliances with regulatory bodies, grievance resolution, ethical conduct etc.
Inflows in ESG funds gaining pace in India
This is as India Inc. is also recognizing the importance of managing the ESG factors effectively as this would eliminate any likely business risks and would give a boost to long term capital from investors who now are giving significant importance to ESG factors for their investment related decisions.
SIP returns from best ESG funds
|ESG Fund||Asset size||NAV as on May 27||1-year return||3-year return||5-year return|
|SBI Magnum Equity ESG Fund - Regular Plan - Growth|
|Rs. 3535 crore||141.58||49.62%||20.22%||15%|
|Quantum India ESG Equity Fund - Regular Plan - Growth|
|Rs. 38 crore||14.97||56.2%|
|Axis ESG Equity Regular Growth||Rs. 1927 crore||14.22||42.13 %|
1. SBI Magnum Equity ESG Fund - Regular Plan - Growth:
This is a CRISIL 1-star rated ESG fund and is the oldest fund from the category. Expense ratio of the fund is over 2 percent. The 1-year return from this fund has been 63 percent as against the Nifty 50 return of 72 percent.
The fund has over 90 percent investment in Indian stocks, with over 70 percent in large cap stocks. SIP in the fund can be started for as less as Rs. 500
Top 10 stocks in the portfolio of the fund include Infosys, HDFC Bank, TCS, ICICI Bank, Bharti Airtel, L&T, Axis Bank, Page Industries and Divis Laboratories among others.
2. Quantum India ESG Equity Fund - Regular Plan - Growth
This is a thematic fund from the Quantum Mutual fund AMC. The fund has segregated its corpus with 59 percent funds in large cap stocks, 25 percent in mid cap and 4 percent in small cap stocks.
The expense ratio of the scheme is 1.68 percent and is categorized to be a high risk carrying mutual fund as per the Mutual fund risk o meter.
The fund's 10 top stock holding include TCS, Infosys, HDFC, Wipro, Tata Motors, Tata Chemicals, Tata Consumer Products and Havells India among others. Minimum Lump Sum and SIP investment in this Quantum Fund can be made for Rs. 500.
3. Axis ESG Equity Regular Growth:
The thematic fund carries an expense ratio of 2.11 percent. The fund has 71 percent in Indian stocks of which over 53 percent is in large cap stocks, 9.4 percent in mid cap and over 1 percent in small cap stocks.
For the lump sum and SIP investment, an investor need to park in a minimum of Rs. 5000 and Rs. 1000, respectively.
Some of the top stock holdings of the fund include Avenue Supermart, Bajaj Finance, Kotak Mahindra Bank, Wipro, Nestle, Info Edge, HDFC and Torrent Power among others.