InvestorQ : What are ESG funds and why are the attracting so much attention of late?
vidhya Laxmi made post

What are ESG funds and why are the attracting so much attention of late?

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sarah Leo answered.
4 months ago
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ESG Funds are short for environment social and governance funds. They are also called sustainable funds as they invest only in companies that are conducive to the environment, that are socially meaningful and that follow highest standards of corporate governance. While the concept is just about picking up in India, globally the experience has been that such ESG funds normally tend to outperform the other funds and are value accretive.

In the last two years, the AUM of ESG funds in India have grown 4-fold to Rs.11,800 crore, although they are still quite small in absolute size. Out of the 10 ESG funds in India, 8 were launched only in the last one year, which shows the recent bias of these funds. However, there is concentration in that the SBI Magnum Equity ESG fund alone accounts for 32% of overall AUM of domestic ESG funds. Nifty ESG index has outperformed Nifty in last 1 year.

Globally, there has been a surge in retail interest in ESG funds. While retail accounted for just 11% of ESG fund AUM in 2012 globally, today they account for 25% of AUM. That trend is expected to eventually rub off on India too.

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