Investors still warming up to ESG-focussed funds; asset base drops in FY23

Sustainable or ESG (environmental, social, and governance) focused mutual funds, which are in a nascent stage in India, have seen their asset base declining by Rs 2,020 crore in fiscal 2022-23 even as experts hope such funds will attract greater attention in coming years.

ESG investing is gaining traction globally, and India is also witnessing an increased awareness and interest in sustainable and responsible investment practices. At present, there are 12 mutual fund schemes in India having ESG as their theme.

"With growing concerns about environmental and social issues, coupled with regulatory initiatives to promote ESG investing, the demand for ESG funds is expected to rise in the future. As more investors recognize the potential for both financial returns and positive impact, ESG funds are likely to attract greater attention and witness further growth," Gopal Kavalireddi, Research Head of FYERS, said.

Kaustubh Belapurkar, Director - Manager Research, Morningstar India, also ...