ESG complaint companies have lower risk probability and are in a better position to deal with "possible negative externalities".
Quantum Mutual Fund will launch Quantum India ESG (Environment, Social and Governance) Equity Fund on June 21, which will remain open until July 5.
The open-ended equity oriented scheme will invest in a basket of stocks with good environment, social and governance standards.
ESG investing, a well-known concept outside India (Europe, US, Canada, Australia and Japan), has been gaining traction in the country. Not only Fund houses, but regulators are also pushing for good corporate governance practices, company disclosures, timely audits, and uniform accounting standards through circulars.
In terms of asset allocation, Quantum Mutual Fund will invest at least 80 percent of its assets in equity and equity-related instruments of companies following ESG criteria, while the balance 20 percent will be in money market instruments and liquid schemes of mutual funds.
"The QESG Fund will invest in clean, sustainable and responsible companies and hence are more credible investments," said Chirag Mehta, Senior Fund Manager- Alternative Investments who will be co-managing the fund with Sneha Joshi.
At an event to announce the launch of the fund, Mehta pointed out that ESG complaint companies have lower risk probability and are in a better position to deal with "possible negative externalities".
Mehta was optimistic that investors are getting aware about ESG Fund and will be keen to invest in such products. However, he refrained from sharing the collection target for this fund.
The spate of corporate governance issues is increasing, which may force the mutual fund industry to launch funds based on ESG investing.
So far, the industry has one ESG Fund from SBI Mutual Fund and this will be the second offering from Quantum Mutual Fund.The Great Diwali Discount!
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