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9 Best ESG funds in India in 2022

In the last 5 years, the Nifty ESG fund has outperformed the Nifty 50 index.

The Nifty ESG index has given a 5-year annualized return of 14.91%, while the Nifty 50 index has given a 5 year annualized return of 13.6%.

This is a great opportunity for investors who are looking to invest in sustainable business and who love the environment.

In this post, you’ll look at the best ESG funds in India to invest in.

What is ESG?

ESG funds

“ESG” stands for Environmental, Social, and Governance. Investors are looking at these factors when analyzing companies considerably.

Examples of ESG factors:

Environmental factors
  • Air and water pollution
  • Biodiversity
  • Climate change and carbon emissions
  • Energy efficiency
  • Waste management, etc…

Social factors
  • Customer satisfaction and product responsibility
  • Data security and privacy
  • Gender and diversity
  • Labor standards
  • Human rights, etc…

Governance factors
  • Whistleblower schemes
  • Lobbying and political contributions
  • Audit committee structure
  • Board composition
  • Shareholder rights, etc…

ESG investing is also known as, impact investing, and sustainable investing, socially responsible investing.

What are ESG funds?

ESG funds are portfolios of stocks and bonds which meet the all criteria of Environmental, Social, and Governance factors.

This means stocks and bonds of a fund focus more on sustainability and ESG considerations.

A company is called ESG compliant if it meets all the criteria of environmental, social, and governance standards.

The work of ESG funds is to find companies that meet all criteria of environmental, social, and governance and invest in them.

ESG funds are best for those who looking to invest in sustainable business.

Let’s look at ESG funds in India in which you can invest.

9 Best ESG funds in India

ESG Funds CAGR Expense Ratio Age
SBI Magnum Equity ESG Fund 15.3% 1.34% 9 yrs+
Quant ESG Equity Fund 73.15% 1.51% 1 yr+
Mirae Asset ESG Sector Leaders FoF Fund 23.68% 0.16% 1 yr+
Axis ESG Fund 25.18% 0.54% 2 yrs+
Aditya Birla Sun Life ESG Fund 25.37% 0.93% 1 yr+
ICICI Prudential ESG Fund 23.48% 0.80% 1 yr+
Kotak ESG Opportunities Fund 19.82% 0.38% 1 yr+
Invesco India ESG Equity Fund 29.17% 0.38% 1 yr+
Quantum India ESG Equity Fund 21.53% 0.93% 2 yrs+

SBI Magnum Equity ESG Fund

The SBI Magnum Equity ESG Fund have launched on 01/01/2013. The funds have been in existence for 9 yrs 3 months. This is the oldest ESG fund in India.

Since its inception, the fund has given a return of 272.8% which is the highest among all ESG funds in India.

The last year it gave a return of 25.6% and the CAGR of a company is 15.3%.

Compounded Annual Growth Rate ( CAGR ): CAGR is the average yearly growth rate of an investment over a given period.

SBI Magnum Equity ESG Fund has assets under management worth Rs 4,390.07 crore as of 5/4/2022.

The expense ratio of funds is 1.34%, which is somewhat high than other ESG funds in India.

The majority of fund capital is invested in equity. The portfolio split of a fund is 99.3% equity, 0.6% debt, and 0.1 cash.

The company holds 40 stocks in its portfolio.

The top 5 stock holding of the fund is Infosys Ltd, Housing Development Finance Corporation Ltd, ICICI Bank Ltd, HDFC Bank Ltd, and Axis Bank Ltd.

Investment Objective
The scheme seeks to provide investors with opportunities for long-term growth in capital through active management of investments in a diversified basket of companies following Environmental, Social, and Governance (ESG) criteria.

Quant ESG Equity Fund

The Quant ESG equity funds launched on 15/10/2020. It has been in existence for 1 year and 6 months.

In 2021 it gave a return of 57.33%. Since its inception, the fund has given a return of 72.0%.

It was the best performing ESG fund of last year among all ESG funds in India.

It has assets under management worth 41.16 crores.

It has an expense ratio of 1.51% which is the highest among all other ESG funds in India.

Expence ratio: An expense ratio is the price of owning a mutual fund or exchange-traded fund (ETF).

The Quant ESG Equity Fund consists of 25 stocks in its portfolio.

The fund invests 100% in equity. The top 5 stock holding of a fund is Adani Ports and Special Economic Zone Ltd, Adani Enterprises Ltd, Linde India Ltd, TV18 Broadcast Ltd, and HFCL Ltd.

Investment Objective
The scheme seeks to generate long term capital appreciation by investing in a diversified portfolio of companies demonstrating sustainable practices across Environmental, Social and Governance (ESG) parameter.

Mirae Asset ESG Sector Leaders FoF fund

Since its launch, the fund has been given a 35.6% return. Last year it gave a 20.9% return.

Mirae asset ESG sector leaders FoF fund is launched on 27/10/2020. The fund has been in existence for 1 year and 6 months.

The fund has Rs 135.70 crore worth of assets under management.

Assets under management (AUM): AUM is the total market value of the investments that are held by the individual, ETF, and Mutual Fund.

The funds all holding are in Mirae asset ESG sector leaders ETF.

The portfolio split of a fund is 99.5% equity and 0.5% cash.

The expense ratio of a fund is 0.16%. The fund has the lowest expense ratio among all ESG funds in India.

Investment Objective
The scheme seeks to provide long-term capital appreciation from a portfolio investing predominantly in units of Mirae Asset ESG Sector Leaders ETF.

Axis ESG Fund

Axis ESG fund has assets under management worth Rs 1864.52 crore.

The fund has been in existence for 2 years and 2 months. It is launched on 22/01/2020.

The total return of an Axis ESG fund since inception is 63.7%. Last year the fund gave a return of 18.3%.

The fund holds 49 stocks in its portfolio. The funds’ top 5 stock holding is Bajaj Finance Ltd, Avenue Supermarts Ltd, Nestle India Ltd, Tata Consultancy Services Ltd, and Wipro Ltd.

The portfolio of a fund consists of 97.7% equity, 2.9 debt, and -0.6 cash as of 5/4/2022.

The expense ratio of a fund is 0.54%.

Investment Objective
The scheme seeks to generate long term capital appreciation by investing in a diversified portfolio of companies demonstrating sustainable practices across Environmental, Social and Governance (ESG) parameters.

Aditya Birla Sun Life ESG Fund

It is the fund from Aditya Birla Sun Life Mutual Fund, having was launched on 04/12/2020.

The fund has been in existence for 1 year and 4 months.

Aditya Birla Sun Life ESG Fund has Rs 1029.42 crore worth of assets under management.

The last year the fund has given a return of 27.7%. Since its inception, the fund has delivered a 34.9% return.

The portfolio split of a fund is 98.2 equity, 2.3 debt, and -0.6 cash.

The fund holds 49 stocks in its portfolio.

The top 5 stock holding of a company is Infosys Ltd, Larsen & Toubro Infotech Ltd, Bajaj Finance Ltd, MindTree Ltd, and Axis Bank Ltd.

The expense ratio of a fund is 0.93%.

Investment Objective
The scheme seeks to generate long-term capital appreciation by investing in a diversified basket of companies following Environmental, Social and Governance (ESG) theme.

ICICI Prudential ESG Fund

ICICI Prudential ESG Fund launched on 21/09/2020. The fund has been in existence for 1 year and 6 months.

Since launch, the fund has been given a return of 38.8%. Last year’s fund gave a return of 18%.

The fund has assets under management worth Rs 1520.54 crore.

The portfolio of ICICI Prudential ESG Fund consists of 94.1% equity and 5.9 cash.

The fund holds 49 stocks in its portfolio.

Infosys Ltd, HDFC Bank Ltd, Wipro Ltd, HCL Technologies Ltd, and Housing Development Finance Corporation Ltd are the top 5 stock holding of a fund.

The expense ratio of the fund is 0.80%.

Investment Objective
The scheme seeks to generate long-term capital appreciation by investing in a diversified basket of companies identified based on the Environmental, Social and Governance (ESG) criteria.

Kotak ESG Opportunities Fund

The fund has assets under management worth Rs 1567.11 crore.

It started on 20/11/2020. The fund is 1 year and 4 months old.

Over the period the fund delivered a return of 27.4%.

The portfolio of a fund holds 49 stocks.

The top 5 stock holding of a Kotak ESG Opportunities Fund are Infosys Ltd, Hindalco Industries Ltd, Tata Consultancy Services Ltd, ICICI Bank Ltd, and State Bank of India.

The expense ratio of a fund is 0.38%. It is the second-lowest expense ratio among all ESG funds in India.

The portfolio spilt of a fund is 98.3% equity, 1.1% cash, and 0.6% debt.

Investment Objective
The scheme seeks to generate capital appreciation by investing in a diversified portfolio of companies that follow Environmental, Social and Governance parameters.

Invesco India ESG equity fund

Invesco India ESG equity fund was started on 26/02/2021.

The fund is the youngest ESG fund among all ESG funds in India. It’s been in existence for 1 year and 1 month.

Last year a fund return was 21.1%. Till now fund provided a return of 27.4%.

As of now, the fund size of an Invesco India ESG equity fund is worth Rs 1567.11 crore.

The fund holds 49 stocks in its portfolio.

The top 5 holding of a fund is Infosys Ltd, Kotak Mahindra Bank Ltd, Tata Consultancy Services Ltd, HDFC Bank Ltd, and ICICI Bank Ltd.

The majority of a fund is invested in equity which is 98.3%, other include 1.1% cash and 0.6% debt.

The expense ratio of a fund is 0.38%.

Investment Objective
The scheme seeks to generate capital appreciation from a diversified portfolio of Equity and Equity Related Instruments of companies that are selected based on Environmental, Social, and Governance (ESG) criteria as defined by our proprietary investment framework.

Quantum India ESG equity fund

The funds come under the Quantum Mutual fund. The fund is Launched on 21/06/2019.

It has been in the market for 2 years and 9 months. It is the second oldest ESG fund in India.

It has an expense ratio of 0.93%.

In 2021 the return of a fund was 17.8%. Since its inception, the fund delivered a 71.2% return.

The funds hold 45 stocks in their portfolio. The portfolio consists of 94.2% equity, 6.7% debt and -0.9% cash.

Quantum India ESG equity fund has somewhat higher debt in its portfolio than other ESG funds in India.

Infosys Ltd, Tata Consultancy Services Ltd, Housing Development Finance Corporation Ltd, Wipro Ltd, and Marico Ltd are the top 5 stock holding of a fund.

Investment Objective
The scheme seeks to achieve long-term capital appreciation by investing in share of companies that meet Quantums Environment, Social and Governance (ESG) criteria.

Conclusion

So these are the 9 best ESG funds in India in which you can invest. And can get a return above than Nifty 50 Index.

ESG funds don’t invest in any company that goes against Environmental, Social, and Governance criteria.

The ESG funds are also best for those who want to invest indirectly in companies that meet Environmental, Social, and Governance criteria.

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