ESG Funds: A Global Emerging Opportunity

Posted On Friday, Dec 31, 2021

Table of Contents
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1

What is ESG

2

What Are ESG Funds

3

ESG Funds in India

4

The ESG Market & Returns


The pandemic has made “ESG Funds” a common term for investors.

When the outbreak of Covid-19 started, the world seemed like a dark place for investors.

The markets went for a toss and economies around the globe crashed like a house of cards.

Despite of all this, there were still some companies that were able to be resilient in spite of the pandemic.

And hence, these companies sustained even in tough times.

These companies were able to achieve this feat by incorporating some strong practices in their business strategy.

The funds that invested in these companies, were also able to brave the stormy weather that the pandemic brought along.

We are going to tell you more about these funds, known as ESG Funds.

But before that, we have to understand something else.


What is ESG?

Lets start with what is ESG full form. ESG stands for “Environmental, Social and Governance” factors that play a significant role into investment processes and decision-making. ESG aims to achieve the triple bottom line that is good for the people, planet and profits.

Here are the areas that each of these factors cover:

1. Environmental - Climate change, GHG emissions, Water stewardship, Renewable energy, Waste management, Green Buildings etc

2. Social - Labor practices, Corporate social responsibility, Stakeholder opposition, Product liability, Privacy and data security etc

3. Governance - Minority shareholder treatment, Board Independence, Executive compensation, Corruption, Business ethics and fraud.

Environmental, social, and governance (ESG) criteria are gaining popularity very fast as it is a way for investors to evaluate companies before they invest in them.

The ESG criteria can very well help investors to stay away from companies that might be a greater financial risk, based on their environmental, Social & Governance practices.

We now know what is ESG full form and what it means.

So, the natural progression would be to know ESG funds meaning.


What are ESG Funds?

ESG companies are assessed in a strict manner for parameters like organisational culture, risks involved, management pedigree etc.

There are funds that allocate assets only in shares & bonds of these ESG companies that are evaluated as per the ESG criteria.

That is, based on the factors of environmental, social, and governance.

Such funds are known as ESG Funds.

For any investor looking to invest in companies that are not only sustainable but also environment conscious, ESG Funds are an apt choice because the core aim of ESG funds is to evaluate companies on ESG criteria and invest only in companies that are ESG compliant.

So, you now have a better understanding of ESG and ESG Funds meaning.


ESG Funds in India:

ESG, is a very fast-growing global opportunity.

An opportunity so big that as per data from UN PRI, the value of global assets signing up for this potential investment opportunity has tripled over 8 years in 2020 to $40.5 trillion.

And ESG Funds in India are slowly but steadily gaining their foothold.

In fact, it is a matter of great pride for us at Quantum, that we are one of the first AMC’s to introduce ESG fund in India.


Why ESG Funds:

The adverse effects of climate change have been setting new records across the globe with every passing year.

Global warming is now an even closer threat than it was a decade ago. There are companies which are directly responsible for the emission of harmful elements into our ecosystem.

Just to name a few examples, Australia had to go through huge wildfires that lasted over six months due to extreme heat.

Indonesia on the other hand was threatened by floods caused due to rising sea levels.

Coastal cities are always under the danger of being under the water sooner than they think it will happen. Whereas the cities away from the coast are falling short of water.

Emerging economies will keep consuming more resources with the aim to achieve new levels of growth.

And for them sustainable growth will be a big concern. Because what will a company do if the ecosystem it flourishes in just disappears one day.

ESG investing aims to find & recognize such companies that have established good practices toward environment, be it physical or social.

In case of ESG Funds in India, you know that India is now becoming more conscious of pollution control and climate change.

So, regulators are becoming stringent by the day and the criteria to fulfil to become ESG compliant will only get stronger from here.

It is going to be a tough time for organisations that are not following the ESG regulations.

Meaning that ESG funds in India will emerge as a big opportunity, that is backed by a robust system.


ESG Funds Returns:

Now that you know all of the above, the last thing you would like to know as an investor is about ESG Fund Returns.

In the first year of the deadly pandemic that brought the world to a standstill, many large investment funds that had adopted the ESG criteria beat the broader market.


Speaking about ESG Funds Returns in India, we can give you one example that we can proudly talk about.

One fund that stands out in ESG Funds space in India, is the Quantum India ESG Equity Fund.

An Investment of ₹10,000 in Quantum India ESG Equity Fund this would have performed as below table with respect to benchmarks

Performance of the SchemeDirect Plan
Quantum India ESG Equity Fund - Direct Plan
 Current Value ₹10,000 Invested at the beginning of a given period
PeriodScheme Returns (%)Tier 1 - Benchmark# Returns (%)Additional Benchmark Returns (%)##Scheme Returns (₹)Tier 1 - Benchmark# Returns (₹)Additional Benchmark Returns (₹)##
Since Inception (12th Jul 2019)24.87%24.08%18.90%17,01016,75515,130
Nov 27, 2020 to Nov 30, 2021 (1 year)34.99%37.99%30.28%13,53213,83613,056

#NIFTY100 ESG TRI, ##S&P BSE Sensex TRI. Data as of Nov 30, 2021.

Past performance may or may not be sustained in the future.

Load is not taken into consideration in Scheme returns calculation. Different Plans shall have a different expense structure

Returns are net of total expense and are calculated on the basis of Compounded Annualized Growth Rate (CAGR). The Scheme is managed by Mr. Chirag Mehta and Ms. Sneha Joshi. Mr. Chirag Mehta is the Fund Manager effective from July 12, 2019. Ms. Sneha Joshi is the Associate Fund Manager effective from July 12, 2019. Mr. Chirag Mehta manages 5 schemes of Quantum Mutual Fund. For the performance of other Schemes Managed by Mr. Chirag Mehta please click here


Now you are equipped with the information you need to have about ESG to begin with.

We told you about ESG funds in India, ESG funds meaning, ESG funds full form, ESG funds returns and more.

So, if you want to start investing in Quantum India ESG Equity Fund, you can start right here.


Product Labeling
Name of the SchemeThis product is suitable for investors who are seeking*Risk-o-meter of SchemeRisk-o-meter of Benchmark
Quantum India ESG Equity Fund

(An Open ended equity scheme investing in companies following Environment, Social and Governance (ESG) theme)

Primary Benchmark: Crisil Liquid Fund Index
• Long term capital appreciation

• Invests in shares of companies that meet Quantum's Environment, Social, Governance (ESG) criteria
Quantum Tax Saving Fund
Investors understand that their principal will be at Very High Risk
Quantum Tax Saving Fund
*Investors should consult their financial advisers if in doubt about whether the product is suitable for them.
The Risk Level of the Scheme in scheme Risk O Meter is basis it's portfolio as on November 30, 2021.
The Risk Level of the Benchmark Index in the Risk O Meter is basis it's constituents as on November 30, 2021

Disclaimer, Statutory Details & Risk Factors:

The views expressed here in 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.

Please visit – www.QuantumAMC.com to read scheme specific risk factors. Investors in the Scheme(s) are not being offered a guaranteed or assured rate of return and there can be no assurance that the schemes objective will be achieved and the NAV of the scheme(s) may go up and down depending upon the factors and forces affecting securities market. Investment in mutual fund units involves investment risk such as trading volumes, settlement risk, liquidity risk, default risk including possible loss of capital. Past performance of the sponsor / AMC / Mutual Fund does not indicate the future performance of the Scheme(s). Statutory Details: Quantum Mutual Fund (the Fund) has been constituted as a Trust under the Indian Trusts Act, 1882. Sponsor: Quantum Advisors Private Limited. (liability of Sponsor limited to Rs. 1,00,000/-) Trustee: Quantum Trustee Company Private Limited. Investment Manager: Quantum Asset Management Company Private Limited. The Sponsor, Trustee and Investment Manager are incorporated under the Companies Act, 1956.

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