Quantum India ESG Equity Fund NFO – Should you invest?
Quantum India ESG Equity Fund NFO – Should you invest?
Mutual Fund houses are coming up with unique mutual fund schemes to attract investors. Quantum Mutual Funds has launched ESG Equity Mutual Fund scheme which is thematic mutal fund. Quantum India ESG Equity Fund invests in Environment, Social and Governance criteria. ESG is gaining ground with 26% of total assets under socially-responsible investment. This ESG Equity Fund from Quantum India would open for subscription from 21st June, 2019. How are the existing ESG Mutual Funds performing now? Should you invest in Quantum India ESG Equity Fund?
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Features of Quantum India ESG Equity Fund NFO
This is an open-ended mutual fund equity scheme.
This scheme would open for subscription on 21st June, 2019
This scheme would close for subscription on 5th July, 2019.
Since this is an open ended scheme, it would again open for subscription after allotment of Mf units after the NFO period. This would reopen for subscription on 19th July, 2019.
This scheme is available in both regular and direct plans.
This plan offers both growth option and dividend option.
This scheme is available for lump sum and SIP investment.
Minimum investment is Rs 500 and in multiples of Rs 1 there-off for lump sum investments.
Minimum investment is Rs 500 per month for monthly SIP and for a tenure of 6 months.
The NAV of the NFO is Rs 10 per unit now during initial subscription.
There is no entry load to invest in this mutual fund scheme.
If one wants to exit before 1 year from the date of investment, there is a 1% exit load.
This scheme is classified as HIGH risk scheme.
Scheme total expense ratio (TER) is estimated at a maximum of 2.25% of the total assets on any day.
Who can invest in this mutual fund scheme?
Any of the following can invest in this scheme.
1) Resident Individuals
2) Resident Indian Nationals, including partnership forms, companies, Banks, HUFs, Sole Proprietorship etc.,
4) Foreign Portfolio Investors
Who is the Fund Manager of Quantum India ESG Equity Fund NFO NFO?
The Fund Manager is Mr. Chirag Mehta and Ms. Sneha Joshi.
What is the benchmark for this scheme?
The benchmark for this scheme is NIFTY 100 ESG TRI.
What is the investment objective and strategy of this Quantum India ESG Equity Fund NFO?
The Investment Objective of the scheme is to achieve long-term capital appreciation by investing in share of companies that meet Quantum’s Environment, Social and Governance (ESG) criteria.
What is the allocation pattern in this mutual fund scheme?
This fund investment pattern is as follows:
1) It invests 80% to 100% in Equity & Equity Related Instruments of Companies following ESG Criteria. The risk profile in this segment is HIGH.
2) It invests 0% to 20% in Money Market Instruments and Liquid Schemes of Mutual Funds. The risk profile in this segment is LOW.
Can NRI invest in this MF scheme?
Yes, they can invest in this scheme. They can invest on repatriation or non repatriation basis.
Why should you invest in Quantum India ESG Equity Fund NFO?
1) It is unique mutual fund scheme that invests in ESG Criteria.
2) According to a recent report by Bloomberg Intelligence, ESG and sustainability-focussed ETFs should continue to grow based on niche themes such as low-carbon, climate and gender. While developed market ESG indices outperformed in 2018, the MSCI Emerging market ESG leaders trailed but still outperformed on a long-term basis. These indices need to keep up their out-performance to keep the investments coming, the report said. Now this concept is spreading wide in India.
3) There is strong research evidence of ESG investing delivering superior returns since companies with strong sustainability scores demonstrate better operational performance and are less risky.
Some key risk factors you should consider before you invest in ESG funds
One should consider some of these risk factors / negative factors before investing.
1) This scheme invests based on ESG criteria where such investment strategy is relatively new in India. Mutual Fund may or may not gain from such new strategies.
2) Stocks that have good ESG criteria could be available at high stock price. This fund might invest in such stocks at high price for which the real value could be low.
3) Investors should not assume any guaranteed returns from ESG mutual fund schemes.
4) Since it is a new mutual fund scheme, there is no past performance, hence we would know how the fund would perform in the future.
5) It invests upto 20% in debt instruments where there is interest rate risk and corporate credit down grading risk.
How is the Performance of ESG Mutual Funds in India?
Currently there is only one mutual fund scheme under ESG i.e. SBI Magnum ESG Mutual Fund. Let us look at the performance.
1) SBI Magnum ESG Mutual Fund has AUM of Rs 2,391 Crores as on 31st May, 2019.
2) This fund originally named as SBI Magnum Equity Fund that was launched in 1991, hence having high AUM.
3) This mutual fund scheme gave 12% annualized returns it the last 10 years, 12% annualized returns in the last 5 years and 12% annualized returns in the last 3 years.
4) This fund top holidings include HDFC Bank, Reliance Industries, Kotak Mahindra Bank, Bajaj Finance, ICICI Bank, Larsen & Toubro, Axis Bank, Tata Consultancy Services, Infosy and SBI. Means this portfolio is mostly a replica of what Bluechip mutual funds hold.
Should you invest in the Quantum India ESG Equity Fund NFO?
Owing to several Scams and downgrading of credit ratings of the corporates in India, investors are majorly concerned about corporate governance issues. Good corporate governance companies tend to perform well in the medium to long term. Indian investors are now moving towards focussing on investing that meets ESG criteria which could be relatively safer bet. If you are high risk investor and want to test a new ESG mutual fund scheme, you can invest in this scheme. Alternatively you can invest in SBI Magnum ESG Mutual Fund scheme that is already existing in the market which invests in ESG criteria. Moderate to low risk investors should stay away from such high risk mutual fund schemes.
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