Traditionally, investment decisions followed a standard pattern. You analyse a company based on its financial performance. If the numbers were robust and profitability remained consistent, the investment got a thumbs-up. However, with resources becoming harder to come by across industries, it is incumbent upon investors to keep the sustainability of businesses in mind, and not just profits, while investing in a stock. Does the company pollute the environment? Does it practice ethical labour standards? Does it have transparent auditing policies? These are some of the many factors that are involved when considering a company’s Environmental, Social and Governance (ESG) rating.
The Mirae Asset ESG Sector Leaders ETF is one such fund that aims to help invest in companies that score well on ESG parameters. The index fund is benchmarked on the NIFTY100 ESG Sector Leaders TRI (Total Return Index)—a basket of large-cap companies with superior ESG risk management scores. Here’s all you need to know before investing in the NFO.
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| Good to know ETF Since the composition of an index changes little over time, ETFs require lesser ‘management’ than a mutual fund that tries to beat market returns. Hence, it’s called a passive investment instrument. That’s also why ETFs are generally less expensive than ordinary mutual funds. |
Investment objective
In addition to making investors a participant in sustainable businesses, the Nifty100 ESG Sector Leaders Index has outperformed the Nifty 100 Index since inception (2014). As per the NSE, the ESG index returned a 12% CAGR against 10.8% CAGR returned by the Nifty100. In the last 3 years too, the ESG Index returned 8.5% CAGR against the 5.2% CAGR recorded by the Nifty100 Index. That’s the opportunity that Mirae’s fund aims to tap into.
Here are some of the highlights of the fund.
- It invests in companies with lower business risk and higher sustainable growth opportunity.
- It avoids companies with major controversies.
- It aims to generate higher returns with lower volatility and downsides.
Asset allocation
| Instrument | Indicative Allocations (% of total assets) | Risk Profile | |
| Minimum | Maximum | ||
| Securities included in the Nifty100 ESG Sector Leaders Index | 95 | 100 | High |
| Money market instruments/debt securities, Instruments and/or units of debt/liquid schemes of domestic mutual funds. | 0 | 5 | Low to medium |
Scheme details
| Name | Mirae Asset ESG Sector Leaders ETF |
| Type | An open-ended scheme replicating/tracking Nifty100 ESG Sector Leaders Total Return Index |
| Category | Exchange-traded fund |
| Investment objective | To generate returns, before expenses, that are commensurate with the performance of the Nifty100 ESG Sector Leaders Total Return Index. |
| Benchmark | Nifty 100 ESG Sector Leaders Index (TRI) |
| Entry/Exit Load |
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| Fund managers |
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| Minimum application amount | ₹5000/- and in multiples of ₹1/- thereafter. |
| Additional application amount | No minimum additional amount. Units are purchased /sold in round lots of 1 unit on the stock exchange. |
Riskometer
Mirae Asset ESG Sector Leaders ETF is suitable for investors who are seeking*
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*Investors should consult their financial advisors if in doubt about whether the product is suitable for them.
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Note: The above information has been sourced from the Scheme Information Document provided by Mirae Asset Investment Managers (India) Private Limited. To read the entire document, click here.
Disclaimer: The above article is purely academic in nature and aims to provide knowledge about basic trading concepts & should not be construed as an opinion or advice to invest or trade. RKSV Securities India Private Limited (brand name Upstox) is the distributor of the mutual fund. Mutual fund investments are subject to market risks; please read all the related documents and/or consult your investment advisor before investing. Past performance of an investment asset does not guarantee future returns.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.