🌱 ESG Mutual Funds in India: Aligning Investments with Values in 2025
- Anuradha Mishra
- May 7
- 2 min read
In recent years, there's been a significant shift in investment strategies, with a growing emphasis on sustainability and ethical considerations. ESG (Environmental, Social, and Governance) mutual funds have emerged as a popular choice for investors aiming to align their financial goals with their personal values.
📊 Performance Snapshot of Top ESG Mutual Funds (as of early 2025)
Fund Name | 1-Year Return | 3-Year Return | AUM (₹ Cr) | Expense Ratio |
ICICI Prudential ESG Exclusionary Strategy Fund | 31.89% | 18.55% | 1,528.70 | 1.01% |
Quant ESG Equity Fund | 28.27% | 20.99% | 312.26 | 0.79% |
Axis ESG Integration Strategy Fund | 25.91% | 10.73% | 1,334.37 | 1.27% |
SBI ESG Exclusionary Strategy Fund | 22.96% | 13.36% | 5,806.08 | 1.31% |
Mirae Asset ESG Sector Leaders Fund of Fund | 21.82% | 12.30% | 90.00 | 0.46% |
Source: Dhan.co
📈 Comparative Performance: ESG Funds vs. Traditional Large-Cap Funds
While ESG funds have shown commendable returns, it's essential to compare them with traditional large-cap funds to gauge relative performance.
Fund Category | 1-Year Avg Return | 3-Year Avg Return |
ESG Funds | 32.50% | 15.07% |
Large-Cap Funds | 35.40% | 17.80% |
Source: Angel One
This comparison indicates that while ESG funds are competitive, traditional large-cap funds have slightly outperformed them in recent years.
🧠 Risk-Adjusted Performance Metrics
Evaluating mutual funds requires looking beyond raw returns. Risk-adjusted metrics provide a more comprehensive view:
Sharpe Ratio: Measures the return per unit of risk.
Alpha: Indicates a fund's performance relative to its benchmark.
Beta: Assesses a fund's volatility compared to the market.
For instance, the Quantum ESG Best In Class Strategy Fund boasts:
5-Year Sharpe Ratio: 1.14
5-Year Alpha: 2.11
5-Year Beta: 0.87
🧠 Key Considerations for ESG Investing
Alignment with Personal Values: ESG funds allow investors to support companies that prioritize environmental sustainability, social responsibility, and strong governance.
Performance Metrics: While ESG funds aim for positive impact, it's essential to assess their financial performance and compare them with traditional funds.
Long-Term Commitment: ESG investments often yield better results over the long term, so patience is crucial.
📝 Conclusion
ESG mutual funds offer a pathway to invest responsibly without compromising on returns. As the world moves towards sustainable practices, aligning your investments with these values can be both financially rewarding and personally fulfilling.
Before investing, consider consulting with a financial advisor to ensure that ESG funds align with your overall investment strategy and financial goals.
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Disclaimer: Mutual fund investments are subject to market risks. Past performance is not indicative of future results. Please read all scheme-related documents carefully before investing.
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