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ESG (environmental, social and governance) investment - that takes into account sustainable investing -- is in vogue. And latest to join the fray are ESG Sector Leaders Exchange Traded Fund (ETF) and Fund of Fund (FoF) by Mirae Asset Investment Managers

ESG (environmental, social and governance) investment - that takes into account sustainable investing -- is in vogue. And latest to join the fray are ESG Sector Leaders Exchange Traded Fund (ETF) and Fund of Fund (FoF) by Mirae Asset Investment Managers

ESG (environmental, social and governance) investment - that takes into account sustainable investing -- is in vogue. And latest to join the fray are ESG Sector Leaders Exchange Traded Fund (ETF) and Fund of Fund (FoF) by Mirae Asset Investment Managers. The two NFOs are Indias first ESG-focussed passive investments that will track Nifty 100 ESG Sector Leaders Index. The NFO opened for subscription today and will close on November 10, 2020. This is the third ESG-focussed NFO in a span of a couple of months after the ones by ICICI Prudential and Quant Mutual Fund were launched in September and October, respectively. In fact, subscription to Quant ESG Equity Fund NFO is ongoing and will close on November 6. SBI Magnum Equity ESG Fund with an AUM of Rs 2,731 crore is the oldest ESG Fund in India. It was initially a diversified equity fund that reoriented itself as an ESG-compliant fund in 2018.   "Companies that integrate the focus on Planet, People and Profit into its core corporate structure tend to have a positive impact on all stakeholders and have competitive advantage over others, which in turn could translate to sustainable profit in the long run," says Swarup Mohanty, CEO, Mirae Asset Investment Managers India Pvt. Ltd. Should you invest?If you consciously want to invest only in socially responsible companies, you may consider ESG-focussed ETF or FoF. Mirae Asset ESG Sector Leaders ETF & FoF would be an additional option given its passive nature of investment. Passive funds come with lower expense ratio compared to actively managed funds, but in case of FoF, the investors end up paying dual expenses -- of the FoF itself and the funds in which FoF invests. However, FoF helps in diversification as it reduces fund specific performance risk. The Mirae Asset ESG Sector Leaders FoF will predominantly invest in Mirae Asset ESG Sector Leaders ETF. All other ESG funds in the market are actively managed. If you already have some exposure in Nifty50 or Nifty100 stocks, ESG investment is unlikely to add value to your portfolio. "The ESG theme has been popular among overseas investors and has been gaining favour among Indian investors too. Research shows that companies which score well on ESG could be more durable bets in the long term. Given that ESG is an evolving field and Nifty 100 ESG index stocks are present in other actively managed funds, a concentrated investment into a ESG ETF may not be necessary," says Mrin Agarwal, founder, Finsafe India. Investors who prefer going for ethical investment, may go ahead with Mirae Asset ESG NFO. But others may consider some different options. If you have to choose among passive funds, the ones tracking Nifty50 or Nifty100 could be a good choice. "ESG investing is a fairly recent trend and mutual fund investors should wait and see how it evolves before jumping in. Besides, there are many dimensions one needs to keep in mind while choosing a passive fund - costs, tracking error, replicability of the index, liquidity. You already have some good options tracking the Nifty50 which tick all of these boxes. Investors should opt for them if they want to go passive," says Dhirendra Kumar, CEO, Value Research.   Between Mirae Asset ESG ETF and FoF, although the ETF will have lower cost, you will need a demat and a trading account to be able to transact in them. Liquidity could also be an issue. "Liquidity in an ETF is subject to its trading volumes on stock exchanges. You do come across ETFs tracking even the mainstream indices which dont trade at all on many days. This limits the ability of an investor to exit from them. FoFs, on the other hand, can be more convenient to buy and sell for most mutual fund investors. Liquidity is also usually not a concern as you are dealing directly with the AMC. For these reasons, FoFs are more suitable even though they are more expensive. But investors who already have a demat account and are comfortable transacting on stock exchanges can consider ETFs as well," suggests Kumar. Finally, its not necessary to invest during the NFO period. One can wait for the NFO money to get deployed and details of expense ratio and tracking error etc to be out before you invest. Also read: Are children MFs good to fund your childs future?

ESG (environmental, social and governance) investment - that takes into account sustainable investing -- is in vogue. And latest to join the fray are ESG Sector Leaders Exchange Traded Fund (ETF) and Fund of Fund (FoF) by Mirae Asset Investment Managers. The two NFOs are Indias first ESG-focussed passive investments that will track Nifty 100 ESG Sector Leaders Index. The NFO opened for subscription today and will close on November 10, 2020.

This is the third ESG-focussed NFO in a span of a couple of months after the ones by ICICI Prudential and Quant Mutual Fund were launched in September and October, respectively. In fact, subscription to Quant ESG Equity Fund NFO is ongoing and will close on November 6. SBI Magnum Equity ESG Fund with an AUM of Rs 2,731 crore is the oldest ESG Fund in India. It was initially a diversified equity fund that reoriented itself as an ESG-compliant fund in 2018.  

"Companies that integrate the focus on Planet, People and Profit into its core corporate structure tend to have a positive impact on all stakeholders and have competitive advantage over others, which in turn could translate to sustainable profit in the long run," says Swarup Mohanty, CEO, Mirae Asset Investment Managers India Pvt. Ltd.

If you consciously want to invest only in socially responsible companies, you may consider ESG-focussed ETF or FoF. Mirae Asset ESG Sector Leaders ETF & FoF would be an additional option given its passive nature of investment. Passive funds come with lower expense ratio compared to actively managed funds, but in case of FoF, the investors end up paying dual expenses -- of the FoF itself and the funds in which FoF invests. However, FoF helps in diversification as it reduces fund specific performance risk. The Mirae Asset ESG Sector Leaders FoF will predominantly invest in Mirae Asset ESG Sector Leaders ETF. All other ESG funds in the market are actively managed.

If you already have some exposure in Nifty50 or Nifty100 stocks, ESG investment is unlikely to add value to your portfolio. "The ESG theme has been popular among overseas investors and has been gaining favour among Indian investors too. Research shows that companies which score well on ESG could be more durable bets in the long term. Given that ESG is an evolving field and Nifty 100 ESG index stocks are present in other actively managed funds, a concentrated investment into a ESG ETF may not be necessary," says Mrin Agarwal, founder, Finsafe India.

Investors who prefer going for ethical investment, may go ahead with Mirae Asset ESG NFO. But others may consider some different options. If you have to choose among passive funds, the ones tracking Nifty50 or Nifty100 could be a good choice.

"ESG investing is a fairly recent trend and mutual fund investors should wait and see how it evolves before jumping in. Besides, there are many dimensions one needs to keep in mind while choosing a passive fund - costs, tracking error, replicability of the index, liquidity. You already have some good options tracking the Nifty50 which tick all of these boxes. Investors should opt for them if they want to go passive," says Dhirendra Kumar, CEO, Value Research.  

Between Mirae Asset ESG ETF and FoF, although the ETF will have lower cost, you will need a demat and a trading account to be able to transact in them. Liquidity could also be an issue. "Liquidity in an ETF is subject to its trading volumes on stock exchanges. You do come across ETFs tracking even the mainstream indices which dont trade at all on many days. This limits the ability of an investor to exit from them. FoFs, on the other hand, can be more convenient to buy and sell for most mutual fund investors. Liquidity is also usually not a concern as you are dealing directly with the AMC. For these reasons, FoFs are more suitable even though they are more expensive. But investors who already have a demat account and are comfortable transacting on stock exchanges can consider ETFs as well," suggests Kumar.

Finally, its not necessary to invest during the NFO period. One can wait for the NFO money to get deployed and details of expense ratio and tracking error etc to be out before you invest.

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