Aditya Birla Sun Life AMC has announced the launch of ‘Aditya Birla Sun Life ESG Fund’. It is an open-ended equity scheme that follows the theme of the Environment, Social, and Governance (ESG). The fund would be involved in ESG aligned existing and emerging opportunities, elimination of risk, and investment in high quality and sustainable growth compounders to generate a better return by risk-adjustments. During the NFO period, investors can apply at a minimum rate of Rs. 500 and in multiples of Re 1 thereafter. Investors can either opt for SIP or invest in a lump sum. The NFO of this fund is open for subscription from December 4 and till 18 December.
The company Adithya Birla Sun Life Mutual Fund has a partnership with leading global ESG research provider ‘Sustainalytics’. It enables for ESG scores and ratings which will be the filter for defining the investment universe. Each organization will be scored on three pillars of ESG and non-conforming sectors could be excluded. Further, it will be screened based on fundamental analysis and financial parameters with an amalgamation of top-down and bottom-up approaches. The fund would be market cap agnostic. Investors could invest in international securities adhering to ESG practices up to 35 percent of the fund’s total assets.
A. Balasubramanian, MD, and CEO, Aditya Birla Sun Life AMC said that worldwide ESG has increasingly become an important factor of investment decisions, beyond the traditional financial parameters. It has gained more importance after COVID-19. The majority in a survey across 1600 plus respondents felt that their attitude towards ESG in investment decision making had made changes after the pandemic. He added that it is a great change in the investor’s mindset. ESG concept is at a very initial stage in India and is widely unexplored, though it’s a globally established theme. With the Indian Government also emphasizing its ESG awareness recently and global flows into ESG centered sectors and companies seeing consistent growth, the theme may have the potential to play out secularly.
Experts said that historically ESG compliant companies are less risky, the company having better operational performance, and generating better returns too. The portfolio of the company looks to benefit from rising flows into ESG compliant companies which increases the possibility of re-rating and augurs well for long-run market performance. From big institutions to individual investors, there is a growing consideration of non-financial risks in investment decisions. ESG lens helps them to look beyond the traditional investment components to identify high quality socially responsible companies for investing.
