Sebi allows mutual funds to expand ESG offerings. How it will impact investors' money?
Mutual fund is a retail investment vehicle and it is better to keep it simple rather than make it complex for the investors. Experts believe that the introduction of five new strategies under the ESG scheme for mutual funds will provide responsible investment avenues for investors. Although SEBI always takes steps in the interest of the investor community at large and this might be done with an angel of creating more transparency. Disclosure norms addition is a welcome step that increases investors’ confidence and awareness, added Kochar.
ESG is a good theme to invest and it is very popular worldwide. In India, it is started gaining traction.
"Gone are the days when ESG was merely a Western preference, as Indian Financial markets are now making a strong impact on the global stage," PTI quoted Akshat Garg, Senior Manager (Research) Choice Broking. As per Kochar, ESG-compliant companies attract FPI money also. Having said that investors should not take big exposure in the thematic fund and should allocate small per cent of the fund as an asset allocation strategy.
Going by the Sebi circular, the market regulator has mandated ESG schemes to invest at least 65 per cent of assets under management (AUM) in listed entities. where assurance on the BRSR (Business Responsibility and Sustainability Reporting) Core is undertaken.
The balance AUM of the scheme can be invested in companies having BRSR disclosures. In addition, the Securities and Exchange Board of India (Sebi) has put in place a disclosure framework for the ESG scheme.
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