If you’ve been following up on the financial world lately, you might have heard about a new type of mutual fund making waves lately. And by lately, we mean it has been gaining traction around the world in the last couple of years.
Although it is too early to comment on their results but
they have been performing well in the last few years compared to the standard. These
funds are called esg funds.
ESG investing is basically sustainable investing, taken into account from companies
based on environmental, social and governance parameters. These funds mainly
focus on the non-financial aspect of the company and invest in stocks of only
those companies who follow the ethical route, haven’t harmed the environment,
strictly follow Corporate Social Responsibility and have good relationships
with stakeholders.
These funds, therefore are limited but slowly getting
noticed. Companies that produce tobacco, alcohol etc are automatically ruled
out from these funds for obvious reasons. The good thing is that esg funds in
india are gaining popularity and many companies have started new funds
under esg or have renamed some of their existing funds and shifted their
policies accordingly.
The good thing about these funds is that you as an investor know
where your money is getting invested at. And for a clear conscience, such funds
are the best to invest in. However, before you venture into the relatively new
but ethical kind of stocks, it is better to get a little expert opinion. Follow
the market for a while, read more about such stocks and funds or better yet,
consult your fund manager. They’re better suited and more knowledgeable in
these situations. Even experts agree that not enough data is available on
individual fund performance as it is mostly a new product. So, a little
research is needed before diving into the world of ESG investments.
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