Earlier this week, we introduced you to an excellent investing opportunity.
It’s called ESG investing.
Our Senior Fund Manager - Chirag Mehta’s interview, covered the preliminary questions on ESG, what sustainable investing is and how it can generate better returns.
We also shared details of a survey of managers who are overseeing US$ 12.9 trillion worth of AUM which shows that ESG investing could be a good investment opportunity in the coming years and decades.
Today, we are taking this conversation forward.
As you are now aware, global value of assets invested in Environmental, Social and Governance (ESG) inclusion in investment decisions tripled in just eight years, to reach $40.5 trillion in 2020, according to data from UN PRI.
This global trend may play out in India too…
The Nifty 50 Index has been the traditional flagship index used to gauge Indian stock markets.
But as markets and trading strategies became more complex broader indices were developed.
In 2011 a broad market index called the Nifty 100 ESG Index was launched. It uses the Nifty 100 Index as a base.
Let’s consider Nifty 100 ESG Index’s performance attributes in recent times.
In 2018, Nifty 100 ESG Index outperformed the Nifty 100 Index on a calendar year basis by ~2.9%.
In February 2020, the COVID-19 crisis had just begun battering markets.
But the Nifty 100 ESG Index outperformed the Nifty 100 Index by 1.73%.
By the end of July 2020, the markets had recovered most of their losses.
And what do you think happened to the Nifty 100 ESG Index?
The Nifty 100 ESG Index again outperformed the Nifty 100 Index by 2.36%.
Now that’s something, isn’t it?
So how does this index outperform the markets?
Although both the indices appear to be similar, the one major difference is Quality.
Nifty 100 ESG Index consists of select large cap companies that score high on risk management and ESG compliance. The companies offer additional benefit of low volatility as compared to Nifty 100.
It’s this ESG filter that gives them to edge to outperform.
This Nifty 100 ESG Index has indeed majority of times have outperformed the Nifty 100 Index.
Source: NSE India, July 2020- Past Performance may or may not be sustained in future.
If there was ever a more profitable Nifty large cap index across business cycles, your search ends here…
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Please visit - www.QuantumMF.com to read Scheme Specific Risk Factors. Investors in the Scheme(s) are not being offered a guaranteed or assured rate of return and there can be no assurance that the scheme’s objective will be achieved and the NAV of the scheme(s) may go up or down depending upon the factors and forces affecting securities markets. Investment in mutual fund units involves investment risks such as trading volumes, settlement risk, liquidity risk, default risk including possible loss of capital. Past performance of the Sponsor / AMC / Mutual Fund does not indicate the future performance of the Scheme(s). Statutory Details: Quantum Mutual Fund (the Fund) has been constituted as a Trust under the Indian Trusts Act, 1882. Sponsor: Quantum Advisors Private Limited. (liability of Sponsor limited to Rs. 1,00,000/-) Trustee: Quantum Trustee Company Private Limited. Investment Manager: Quantum Asset Management Company Private Limited (AMC). The Sponsor, Trustee and Investment Manager are incorporated under the Companies Act, 1956.